This investment idea is a little different than my typical stock idea. I almost exclusively focus on the smallest of small stocks in The United States and Canada. I like investing in geographies I know and in jurisdictions where I know my assets will not get seized. That being said, I have started to purchase the VanEck Russia ETF (RSX).
I nibbled on some Lukoy last week. I tried to add more shares yesterday. At 10AM EST the ticker was live on Fidelity. But my purchase did not go through. By 10:30 the ticker had stopped. Based on comments I’ve seen elsewhere no US broker is slowing buying or selling. Even to close the position. The Russian stock market has been closed for 4 days. What do you want to bet that all the big boys got ample warning and closed out, leaving retail to be the bag holders.
I have been tracking the RSX this week and had the same idea as this article. I actually put in a few lowball bids for call options yesterday while trading got halted (but no luck). I would've just got into the position if I knew Fidelity was going to halt trading this morning. Ill be closely monitoring and hopefully I will be able to enter soon. Some call options were trading with such a low premium. The ask on the Jan 2024 calls were break even at $6.50.
i love reading all the coments :) saludos
I stand with Vlad on this. He's less of a globalist than the Ukraine thugs that want nuke weapons on Russia's border. Why align with biden/soros/CNN in this 'stand with ukraine' crap? It's just like the covid suppression. Same exact actors.
1) Investing in Russia right now is morally wrong. The invasion of Ukraine was unjustified and unprovoked. A lot of senseless civilian death and hardship has and will occur. It is so sad.
While there are some comments on this site saying..”don’t believe Western / George Soros propaganda..” that is totally wrong. Whatever Russia’s grievances were, they could have negotiated with Ukraine. America, France & Germany all told Russia privately that Ukraine was not joining NATO.
At this point Putin is a paranoid madman. One small example - he sits 20 meters away from ppl in meetings cuz he is scared of either covid and getting assassinated.
I am disappointed this idea was even brought up on this website.
2) Even ignoring (1), the Russian economy is an going to go into a depression, AND there is NO endgame to this conflict. Russias economy will become significantly isolated. E.g. they won’t even be able to maintain their civilian aircraft as Boeing and airbus have both left. Their stock market won’t open for trading anytime soon. The ripple effects on Russian consumers and small businesses are still to come.
More sanctions are coming and the more Putin bombs Ukrainian cities, the more pressure there will be on NATO to directly intervene. Two weeks ago nobody predicted the amount of direct military aid - particularly stinger and javelin missiles - that the West would give Ukraine. In a Reuters poll 70% of Americans support a no-fly zone over Ukraine. This may be highly unlikely, but the last 2 weeks have taught us that anything is possible.
Limiting or banning purchases of Russian oil and gas is also unlikely, but more possible than a no-fly.
Nobody expected the western economic response to Russia either- not America, Europe or Russia.
Unless Putin does an about face and negotiated a peace deal with Ukraine, I don’t know how this ends. Ukraine isn’t going to accept a shitty deal as nobody can trust Russia anymore. Putin is not acting rational so he is completely unpredictable.
The simplest conclusion will be if the oligarchs or Russian military killed Putin, but who knows how likely that is.
A buy-the-dip mindset is still premised on a functioning economy and stock market. Both may be gone in Russia.
Btw the ruble could still depreciate much more.
It leaves me in dismay to see such dismissive treatment of ethical matters in investing from someone aiming to play the role of a subject matter guru here.
The way I see the events unfolding is:
- Ukraine has been invaded by Russia, in violation of basic international rights
- in order to avoid escalating the conflict, the entire world has refrained from any military engagement, but has shown an unparalleled unity in delivering aid and exerting economic pressure to stop the aggression
- you are recommending to provide foreign capital inflows to the Russian economy, effectively undermining that economic pressure, even if on a minor scale.
Let me explore the two justifications you offered for supposed ethical neutrality of your recommendations.
As you referred to "thousands of small Russian businesses that employ millions of individuals across Russia", what has gone unmentioned are hundreds (likely more) of CIVILIAN CASUALTIES in Ukraine and over a million already displaced and in loss of their possessions, on top of massive infrastructure damage. Many Ukrainians won't be able to "walk away with just a scratch". This selective empathy you chose to express is deeply disturbing.
In the next sentence, you continued the topic stating that "This war is (a) likely not supported by the majority of Russian individuals and businesses", failing, however, to provide any supporting evidence beyond a single tweet containing a company statement (to which "actions speak louder than words" could be an accurate response). As pointed out already, you're not even trying to address your investments at those low-cap, war-opposing firms and individuals, choosing simple broad-market funds which may include companies that profited from war preparations (VanEck appears to be 10% Gazprom...).
It's a massive pity that as an author, being well aware of the ethical considerations, you chose to brush them off so easily.
with all respect as a trader I understand the economic rationale, as a human being I am not able to trade russian stocks with the situation of people of Ukraine
Thanks Alpha. I got in RSX as well.
Happily, most people don’t think the way you do. This is the UK Ukraine fundraiser.
What's the latest with these? I have some OGZPY on Fidelity and RSX on Interactive Brokers. With the delisting, do you just lose these shares?
Besides Lukoil and X5, would you share the other ones on your list? Would be interested in doing a valuation deep dive. Many thanks.
Here in the uk HSBC (the darkest of the devil banks :) still has an etf open,
It’s going to be a volatile mess for a good while and there’s a strong chance they’ll close it / convert to cash - and yet - at 150-200p now vs 900p 10 days ago… might see if it sinks a bit more and snap up a bit.
Great article, I was actually going to ask you if you could do an analysis on Russia stocks.
Surprisingly, RSX is not blocked on Merrill... yet. I had the same thought a couple days ago. Buy the dip~~