Author Topic: Index tracking and/or direct investments in Russia; direct valuta conversion  (Read 3258 times)

Sjalabais

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To turn a saying on its head: What comes down must come up. Russias valuta and markets have tanked like few others, Greece being a notable exception. So even without much insight into details, hoping for political stability on the horizon - I know, that's a bet that might not even be 50/50 in chances - an index tracking investment of the MICEX should offer a handy return on both accounts of valuta conversion (the ruble should stabilize and increase in value) and in nominal value at the exchange. Sanctions have made the country more dependent on producing goods on their own, something that should improve quality, networks and market penetration, for now.

Anybody here who follows that logic? Do you cherrypick stocks in addition? How do you invest - does Vanguard offer an easy point of entry? I'm writing from a small European country with weakened currency myself and I wonder if I can invest directly, without having to go through the US dollar first...

Migrator Soul

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I'm assuming due to your use of the word "valuta" Russian is a language you speak? I'll venture to guess you may be from an old soviet bloc country? Sorry, it piqued my interest.

I'll say that I personally don't see the Russian economy getting any better anytime soon, because I don't see Putin discontinuing his Crimea adventures anytime soon. Despite what Первый канал and other "news" sources say, the continued sanctions will decimate the economy of Russia. It's a losing bet my friend. You would be much better off just buying a good world stock market index fund. Just my opinion though.

beee

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Russia doesn't really need to improve it's economy.
Selling raw oil and gas is easy and makes tons of money.
:(

Migrator Soul

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Sure, the majority of their economy is indeed oil and gas, but even so, the sanctions will still heavily retard any growth.

Sjalabais

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From where I am standing, they are just about to find out that the oil and gas cow isn't that easy to milk anymore. So change must and will happen, but the direction is not clear. So I am aware of this really being a bet, and I also want some positive development to happen in this corner of the world. Maybe it is smarter though to separate that sentiment from business and investment decisions.

@Migrator Soul, you're somewhat right, I was born and grew up just on the "wrong side of the curtain". Currently trying to learn Russian on my own, which is a challenge. Now I live in Norway, as a citizen. :)

Migrator Soul

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From where I am standing, they are just about to find out that the oil and gas cow isn't that easy to milk anymore. So change must and will happen, but the direction is not clear. So I am aware of this really being a bet, and I also want some positive development to happen in this corner of the world. Maybe it is smarter though to separate that sentiment from business and investment decisions.

@Migrator Soul, you're somewhat right, I was born and grew up just on the "wrong side of the curtain". Currently trying to learn Russian on my own, which is a challenge. Now I live in Norway, as a citizen. :)

Personally it isn't a bet I would be willing to take, especially considering the current circumstances.

Keep at it with the language studies, they are worth it. I speak Russian myself, so I understand it being difficult.

Sjalabais

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I figured you might be an expat? This summer, I finally got a first trip to Russia (питер) and it actually exceeded expectations. To see more of it, language skills are essential. Got to say though, it's been a while since I studied and with small kids in the house, my brain is not always working with me...

Migrator Soul

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I figured you might be an expat? This summer, I finally got a first trip to Russia (питер) and it actually exceeded expectations. To see more of it, language skills are essential. Got to say though, it's been a while since I studied and with small kids in the house, my brain is not always working with me...

Nope, just majored in Russian Language Studies and culture in college. :)

hoping2retire35

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I have been wondering about this. Why don't you hear of people investing in russian bonds, I think they are over 10% right now? I see little reason they would actually default.

Any russian (bond or otherwise) investors out there?

Geekenstein

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I don't know squat about Russian bonds, but with a yield of 10% that risk, plus the incumbent currency exchange risk is enough to put me off :)


MustacheAndaHalf

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I have been wondering about this. Why don't you hear of people investing in russian bonds, I think they are over 10% right now? I see little reason they would actually default.

Any russian (bond or otherwise) investors out there?
Thanks for the setup!
https://en.wikipedia.org/wiki/1998_Russian_financial_crisis
In 1998 Russia defaulted on it's bonds, so be wary of earning -100%.  Russia's budget looked shaky in 2015, before oil prices dropped further.  In short, what goes down.. can default.

If you invest in the S&P 500 and one company goes bankrupt, you won't lose much.  When you ignore diversification and invest solely in a great energy company... you can wind up with Enron stock, at a -100% loss.  Not saying it will happen, but there is a risk it can happen (not just with Russia 1998).

Sjalabais

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Well, he didn't say he'd go all in. :) In all honesty though, Russia still has currency reserves, oil and minerals, and it is powerful in its region. Everything looks very dark now, but the potential upside is very bright - especially compared to the dark abyss right next to it.

superannuationfreak

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I'd be more comfortable with an allocation to global/emerging market value stocks (which may include an overweight to Russia).  Still not 100% comfortable, but much more comfortable.

The cheapest way to do that systematically would be something like Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE), or Powershares equivalent (PXH), both for under 0.50% p.a.

Sjalabais

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Do you buy these funds directly at Schwab? I've been thinking about increasing my exposure to oil, but haven't acted on it so far.

hoping2retire35

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I should have also stated their currency is really low right now too. Once oil rises so will the currency; if that happens then the 10% bonds could be more like 60% or whatever.