Timing Russian stocks right now

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BogleInvestorLondon
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Timing Russian stocks right now

Post by BogleInvestorLondon » Mon Mar 03, 2014 12:29 pm

So we do not attempt to pick stocks or time markets. I love the information I have gained from here and appreciate it so much. I am not interested in picking stocks but am however, interested in gaining information.

Looking at Russian companies that are traded in the US, they have plummeted due to the current situation with Ukraine. Would anyone here look at this and come to the conclusion that a certain company has become undervalued? How would one go about knowing if people were panic selling, which has briefly made a stock undervalued....compared to rational selling and the stock value being the true value of the business?

I am not interested in buying or engaging in trading, because I know that if I do it once then I am very likely to do it again (espcailly if I have a good result) and really am interested in just indexing which will make my life SO much easier, plus most probably doing better that way over time. I am purely interested in gaining knowledge as to this current drop...and when stocks like this drop in times of panic. Surely controversy should be every buyers dream, but I guess it is not as simple as that?

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G-Money
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Re: Timing Russian stocks right now

Post by G-Money » Mon Mar 03, 2014 12:35 pm

BogleInvestorLondon wrote:Looking at Russian companies that are traded in the US, they have plummeted due to the current situation with Ukraine. Would anyone here look at this and come to the conclusion that a certain company has become undervalued? How would one go about knowing if people were panic selling, which has briefly made a stock undervalued....compared to rational selling and the stock value being the true value of the business?
I don't believe there is a reliable means of knowing in advance whether a stock is "undervalued." The market price represents the market's consensus: the highest price at which a buyer will buy a stock and the lowest price that a seller will sell a stock. Presumably, none of the market participants are trying to maximize the value they can get in buying/selling the stock.

Any prediction that the real "value" of the company is worth more or less than the market price seems to me to be more of a guess, with roughly 50/50 odds of being correct.
Don't assume I know what I'm talking about.

dad2000
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Re: Timing Russian stocks right now

Post by dad2000 » Mon Mar 03, 2014 12:42 pm

Bogleheads that have Emerging Markets as a separate holding in their AA will likely end up buying more of their EM holding as part of their rebalancing process.

terrabiped
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Re: Timing Russian stocks right now

Post by terrabiped » Mon Mar 03, 2014 12:44 pm

Unexpected crises + stage-one thinking + human emotion = overreactions which then become a vicious cycle. You are looking at a complex chain reaction in a country you probably don't understand, or at least I don't understand. To make things more complicated, there are a host of risks associated with investing in a country like Russia, besides valuations. When it comes to international, I stick with diversified funds only. I wouldn't even consider investing in a Russia specific index fund.

Angst
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Re: Timing Russian stocks right now

Post by Angst » Mon Mar 03, 2014 12:46 pm

maybe some of the posts at this current thread will interest you:
http://www.bogleheads.org/forum/viewtop ... 1&t=134270

michaelsieg
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Re: Timing Russian stocks right now

Post by michaelsieg » Mon Mar 03, 2014 12:56 pm

[OT comments removed by admin LadyGeek]
Glad to just stick with buy and hold and I hope, that we all will not be forced to rebalance into stocks in the next few weeks.

terrabiped
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Re: Timing Russian stocks right now

Post by terrabiped » Mon Mar 03, 2014 1:09 pm

Politics does play a role when investing. Consider the following:
"The market's assessment is that the Russian government is willing to sacrifice both the country's economy and its international standing in order to bolster its pretensions for a Eurasian union," Greenberg said, referring to Moscow's desire for a customs union of ex-Soviet states.
"On the surface this looks like really bad news and it warns of the case for investing in Russia," he said. "It also looks to me that the economy will worsen from here because of this, so some kind of sell-off is appropriate."
Source
Why load up on a specific country with a government that behaves that way? Too much political risk for my money.

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ogd
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Re: Timing Russian stocks right now

Post by ogd » Mon Mar 03, 2014 1:20 pm

Not to mention that many Russian companies are more accurately described as "fiefdoms". It's the sad truth.

OP: you mustn't ignore risk when investing. For example, it's possible that the return expectation for Russian stocks going forward is as good or better than US stocks, but not as good as US stocks leveraged 3x to bring the volatility to a comparable level.

lazyday
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Re: Timing Russian stocks right now

Post by lazyday » Mon Mar 03, 2014 1:22 pm

Sometimes people overreact to new information, sometimes they underreact. It can be difficult to guess which is happening. Some try to analyze valuations and expected returns, but it is tricky.

In a situation like Russia today, there are further complications. For local invesors who are Russian citizens, stock intrinsic values may have dropped. But for outsiders, those values may have fallen further because of political risks such as nationalization of corporate assets. Governments might take actions during or after global conflicts which hurt foreign investors more than local.

The market price may reflect some averaging of these two values, perhaps making stocks cheap for locals and expensive for foreigners.

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G-Money
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Re: Timing Russian stocks right now

Post by G-Money » Mon Mar 03, 2014 1:23 pm

michaelsieg wrote:Not to make this a political thread, but I think ethics can play sometimes in investing decisions.
I would ask myself, why would I send my hard earned capital to Russia, while it is clearly breaking international treaties that it signed.
Somehow I would feel that I am supporting them by giving them my capital….probably the wrong way to look at things, if you want to time markets…
Glad to just stick with buy and hold and I hope, that we all will not be forced to rebalance into stocks in the next few weeks.
But you wouldn't be "sending your money to Russia." If you buy a Russian stock, you would be sending your money to whoever was selling the stock. Maybe it's someone in Russia, but just as likely the seller lives in the US, the UK, Japan, etc.

If you don't want to send your money to Russia, don't buy original-issue Russian bonds.
Don't assume I know what I'm talking about.

Jack FFR1846
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Re: Timing Russian stocks right now

Post by Jack FFR1846 » Mon Mar 03, 2014 1:26 pm

Sure, the stocks have tanked. On the surface, it looks like an opportunity, right? So let's say that the government nationalizes all of these companies. Would you be surprised? I wouldn't.
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packer16
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Re: Timing Russian stocks right now

Post by packer16 » Mon Mar 03, 2014 1:32 pm

If you are defensive investor (as described by Ben Graham in the Intelligent Investor) then you do not pick or time stocks but if you value "tilt" you are doing that to some extent on a diversified basis. Russian stocks were selling for cheap before this crisis (well run oil companies were selling at about 1/3 the price of there Western equivalents). I like Lukoil as an interesting Russian equity because it has closest to Western standards for management and is cheaper than the more state controlled Gazprom and Rosneft. I think you can identify cheap stocks in advance just like you can recognize a $20 bill on the ground. The question is whether the price makes sense. Price is comprised of fundamental or intrinsic value and speculative value. Sometimes the speculative value is negative (like I think it is now for Lukoil). The recognition of value takes experience and time. I believe most can do it but the question is will they spend the time to gain the experience and is it worth your time which can be spent doing other valuable things. I think interests and knowing who you are will also determine if being an enterprising investor is for you.

What evidence do you have of nationalization? It is much easier to tax the profits than to run the companies (at least the Russians have learned this from the USSR days). The pricing of O&G firms also incorporates a tripling of the tax rate if they are fairly priced.

Packer
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michaelsieg
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Re: Timing Russian stocks right now

Post by michaelsieg » Mon Mar 03, 2014 1:34 pm

G-money wrote
If you don't want to send your money to Russia, don't buy original-issue Russian bonds.
A lot of truth in this, I hear they go on sale every once in a while :happy
Another great opportunity to stay away from….

BogleInvestorLondon
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Re: Timing Russian stocks right now

Post by BogleInvestorLondon » Mon Mar 03, 2014 1:39 pm

I am by no means an expert, I am a novice. I was talking about Russian companies that are traded in the US. Are they not different from Russian companies traded in Russia? I thought regulations would be much better in the US.

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Re: Timing Russian stocks right now

Post by hsv_climber » Mon Mar 03, 2014 2:04 pm

Politics aside, lets not forget about possible economic sanctions that can be implemented against Russian companies in the near future.
Gazprom is probably immune right now and might even make extra $$ due to rising natural gas prices in Europe, but other Russian companies may suffer and I have no idea who can predict what will happen.

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G-Money
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Re: Timing Russian stocks right now

Post by G-Money » Mon Mar 03, 2014 2:13 pm

BogleInvestorLondon wrote:I am by no means an expert, I am a novice. I was talking about Russian companies that are traded in the US. Are they not different from Russian companies traded in Russia? I thought regulations would be much better in the US.
Not quite sure what you're asking.

As I understand the term, a Russian company is one whose stock is traded on a Russian stock exchange. These companies are frequently, though I suppose not categorically, domiciled in that country. American investors can still access these stocks via mutual funds or ETFs that invest in foreign stocks (Vanguard Total World, Vanguard Total International Stock Market, the ETFs listed in the link red5 sent you, etc.).

What Russian companies do you have in mind whose stock is traded on an American stock exchange?
Don't assume I know what I'm talking about.

BogleInvestorLondon
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Re: Timing Russian stocks right now

Post by BogleInvestorLondon » Mon Mar 03, 2014 2:32 pm

G-Money wrote:What Russian companies do you have in mind whose stock is traded on an American stock exchange?
Yandex (YNDX). Trades on the NASDAQ.

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VictoriaF
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Re: Timing Russian stocks right now

Post by VictoriaF » Mon Mar 03, 2014 3:01 pm

michaelsieg wrote:[OT comments removed by admin LadyGeek]
Glad to just stick with buy and hold and I hope, that we all will not be forced to rebalance into stocks in the next few weeks.
[OT comments removed by admin LadyGeek]

Victoria

P.S. It takes about a minute before the video comes up; it's probably hosted on an antiquated server with low bandwidth.
Last edited by VictoriaF on Mon Mar 03, 2014 3:40 pm, edited 2 times in total.
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G-Money
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Re: Timing Russian stocks right now

Post by G-Money » Mon Mar 03, 2014 3:21 pm

BogleInvestorLondon wrote:
G-Money wrote:What Russian companies do you have in mind whose stock is traded on an American stock exchange?
Yandex (YNDX). Trades on the NASDAQ.
Well, it's down 13% today. I have no idea if that's too much, too little, or just right. I take it for granted that the market--especially the hedge funds, endowments, institutional investors, etc. whose trades have a material impact on the market--knows more about Yandex than the tidbits I learned from a 30 second reading of its Wikipedia page.

YNDX is selling at 3:16 p.m. Eastern for $32.47. VWO is selling for $38.21. VXUS is selling for $51.29. VSS is selling for $105.76. Why not pretend you bought shares of each at that price. Come back to this thread in a day, a week, a month, and a year from now (or however long you'd plan on holding it). Maybe set calendar reminders so you don't forget. We'll see how each fared.
Don't assume I know what I'm talking about.

lazyday
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Re: Timing Russian stocks right now

Post by lazyday » Mon Mar 03, 2014 3:36 pm

BogleInvestorLondon wrote:I thought regulations would be much better in the US.
Reporting regulations for stocks listed in US can be better than for some companies that aren't listed here. I believe that some stocks trade in US but aren't "listed". Pink sheets maybe.

Reporting regulations may get you more info, but may not save you from a market crash or political risk.

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Ged
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Re: Timing Russian stocks right now

Post by Ged » Mon Mar 03, 2014 4:10 pm

One thing you can count on here is massive disinformation and propaganda from both sides of this mess. Determining what is true and what is not will be very difficult.

Levett
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Re: Timing Russian stocks right now

Post by Levett » Mon Mar 03, 2014 4:16 pm

"One thing you can count on here is massive disinformation and propaganda from both sides of this mess."

Yes.

I wouldn't mind seeing the thread locked.

Lev

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Re: Timing Russian stocks right now

Post by LadyGeek » Mon Mar 03, 2014 4:33 pm

I removed a few off-topic comments. As noted in the prior post, this thread has run its course and is locked (off-topic, politics). See: Forum Policy
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