Saturday, 13 December 2014

Russia Unloved

A couple of months ago, I had taken a tiny position in RSX ETF, an ETF which invest into the Russia stock market. Today, the position is down 35%, what will I be doing? Let look at the chart below.
The chart does not look great, over long term it is trending down, with price remain to be below the 200d MA. On the chart, each of the high is a lower high, and each of the low is a lower low. Russia remains to be an attractive market with one of the lowest PE ratio (about 6), the closet one to this is the China market. Russia is my favourite counter, as I like to invest in things that the crowd is avoiding.
Russia GDP has been growing healthily post the great financial crisis. No one can predict anything with certainty, people are avoiding Russia because they are attracted and chasing rising markets. Over time, investors who invested in unloved counters will be rewarded with excellent profits. After all, we were always told to buy low and sell high, isnt it.


GMGH said...

Hi Oldman,

I agree that Russia seems so unloved right now. Short term, who knows where the bottom is. However, I think on a long term basis, current prices look better and better the more it falls.

I am also invested in a Russia through a proxy UT, looking to add more positions soon. Buy low and sell high sounds so common sense, but it really goes against emotions to execute!

desmond said...

wow, admirable spirit!
i was thinking of long USD/RUB several times but looking at chart and thinking it must have hit the roof and might pull back soon, Each time i was wrong and it went higher and higher.

Sometimes, having the contranian approach and going against the masses has its rewards at the appointed time.

I am sure Russia will be a gem in time to come.
Best of luck

Oldman said...

As what peter lynch mentioned, it is the stomach that will be tested in any correction, not your brain. I am waiting for appropriate entry again. Remember those euro countries got beaten and then bounced back. Good luck on your UT.

Oldman said...

I am not familiar with currency but I believed USD is poised to be stronger in coming years, do have a good risk management.

Felix Leong said...

be greedy when others are fearful!

Oldman said...

hi felix; many people know this but not many can put into execution as we are affected by our emotions after all.

Anonymous said...

Hi Oldman,

Comparing oil & gas related companies vs Russia, I would allocate my resources for oil & gas related companies because the political risk of Russia is greater.


Felix Leong said...

I am long on RSX, I think long term should be okay ba (say 2-3 years), in putin's recent speech he seems very confident that russia will get out of this crisis within 2 years, cheers ^^

Oldman said...

Last week rebounded strongly with huge huge vol. definitely not from retail investors. That's a lot of vol from some group of investors who have strong stomach.