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David Stafford
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Student of markets, enjoys following their course.
My book:
Around the World in Several Pieces
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  • Croatia Enters The Eurozone; Time To Start Investing In Eastern Europe?(GUR)

    I used to have a friend named Gur. I was studying film making at a school in Boston at the time, it was great. Gur I think was Turkish, and its cool to have friends doing film related studies, because you'll occasionally see them trapsing around with a "crew" and some expensive looking school camera. Those were the days.

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    Either way, GUR is also an etf. Its tricky perhaps to invest in eastern Europe. One can invest indirectly via banks like RAIFY(Raiffeisen Bank), etc. which are constantly expanding into Europe, another way is to invest into an etf.

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    ETF's like this have a propensity to have the lions share of their investments in "heavy" industries, or massive companies. Perhaps this is more of a reflection of the investment opportunities that are obvious and which capital can be dumped into per se, namely the obtuse sort of investment that is required of index formation, but none the less, GUR has some massive organizations in its pigeon coop, in keeping with this tradition.

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    According to Marketwatch;(http://www.marketwatch.com/investing/fund/GUR/holdings) some of GUR's major holdings include the likes of Gazprom, which as we all know is the Russian energy giant. Russia has an interesting history, one could argue that the Soviet Union wasn't "crippled" in Afghanistan, but in the oil markets, as in the final days of the Soviet Union, it was heavily reliant on energy deposits in the country north/center primarily in Siberia. There is an interesting story about a "rogue" or "visionary" energy prospector per se,(who discovered these reserves) if anyone care's to look into it, but none the less, its kind of a fantastic story none the less

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    Either way, apart from an 11% composition of Gazprom, OGZPY, we also have a 8.41% holding in AKSJF, aka Sberbank Rossia which is presumably a Russian bank, perhaps a future piece will examine this more in depth. Another 7.92% of the portfolio is comprised of LUKOY, aka Lukoil Holdings. This is also of course another Russian energy play.

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    There's a 4%(3.9%) stake in a Turkish bank which is perhaps somewhat interesting; namely Turkiye Garanti Baranksi or something of the like; TKGBF, which is perhaps interesting and none the less reminiscent of Turkey's euro-aspirations. Another holding which is perhaps of note is a 3% holding of a mining company; NILSY or Norilsk Nickel and Mining, which is of course true to form with such an ETF(heavy industry capital).

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    We have other similar companies comprising the greater than 1% holdings of this portfolio, and who could forget, the jaguar in the tree going unnoticed, the ever present holding in a telecom company. Yes that Cheshire cat is here as well, in the guise of MBT; Mobile Telesystems; with a holding % of 2.28%.

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    Macro; the portfolio is 30% Financial, and 33% oil and gas. Hence together we have a picture of an ETF that has heavy concentrations in specifically Russian banks and Russian heavy industry.

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    Not to really paint with too broad of a brush; but hence we in essence have a very Russian centric etf. This is great if this is what one is looking for, but perhaps in sticking to my initial findings(didn't really mention these) it might be better to get a foothold into specifically eastern Europe, think the border between the Hun and Holy roman empire region, kind of along the diagonal formed by Moldavia, one may want to invest tangentially through more mainland European companies(imagine a line disecting the traditional Alani territories, and or regions comprising and extending to the west from the Ancient and interesting Cucuteni paleolithic culture(diagrams located at end of piece)). For example as mentioned earlier, large European banks, like Raiffeisen(OTCPK:RAIFY) bank from Austria, which is expanding into this zone and Orange for ex; and other traditionally euro-centric cell carriers, already have a heavy presence in this zone, even Starbucks has a smattering of locations in countries such as Romania etc.

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    Needless to say, ETF's may be too obtuse to really invest in more acute growth opportunities, but either way, to really get a foothold into Eastern European investment opportunities, it may be necessary at least on superficial inspection,(public opportunities) to have to invest tangentially through investing in some sort of European trans-national corp or bank to really get at the investment opportunities one has a "hankering" for in this region.

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    Regardless, may one's investments reap rewards, and carry us all to sleep on a gossamer plume of stability.

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    Cucuteni Culture map;(sea is Black Sea);

    (click to enlarge)

    source;http://en.wikipedia.org/wiki/File:Cucuteni-Tripol%27ye_Culture_Outline_Map.png

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    Alani territory;

    (click to enlarge)

    Source;http://en.wikipedia.org/wiki/File:Alania_10_12.png

    Tags: GUR, RAIFY
    Jul 02 11:37 AM | Link | 1 Comment
  • Potential New Approaches To Retail Commodity Investment Products.

    In the world of investments there are obviously certain "musical chair" type situations. Hedge funds, that can only be invested in via certain funds of funds or friends, commodity pools that require certain antes per se to get into. Back in my intern days I remember the refrain concerning the difficulties getting into certain "syndicate"(legal) related opportunities even when investing under the guise of one's own parent company per se; either way, as we all know there are no perfect markets, and perfect access per se. etc.

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    This can make an interesting opportunity/situation for retail investors attempting to invest in commodities specifically. Since the vast majority of public equity is owned by passive indexing investors, there is almost a certain unspoken or perhaps shadow beta that connects all publicly traded equity investments. Hence the pure commodity opportunities to retail investors(average) will most often always have a certain inclusion of market risk to them. In addition to this there is perhaps a more limited choice of options available. Since commodities pool investments are often very manager/approach specific, this can be somewhat taxing in so far as the due diligence required to make a sound investment.

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    One may contrast this to the relative simplicity and high yield associated with indirectly getting into more middle market transactions. With the average private equity deal having a yield range up to around 25%, its not surprising that even after a cut has been made per se to those managing the capital, that one investing indirectly in mid-market-financing companies can still make a healthy yield.

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    Commodities themselves are a tricky investment, and perhaps the various costs to entry etc, make it somewhat of a more difficult play for one's average retail investor. The infrastructure needed to heavily invest in commodities could also be somewhat funny to expect of the average retail investor, and the knowledge of specific market conditions/technical/black-box/other approaches to trading may be too time consuming or unknown to the majority of retail investors(a knowledge of options/options patterns may also not necessarily be in the average retail investor's quiver of investment expertise).

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    Hence I wonder if with all these things taken into account, if there isn't some way to make an ideal closed-pseudo-REIT-like commodity fund. Something like a closed mutual fund, and pooled like a REIT, perhaps even a pool of commodity funds; for surely there would be enough managers to find to fill up and diversify away manager risk per se.

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    Either way, perhaps given the somewhat-not-so-stellar performance of some more common retail commodity investments as of late, it might be interesting to see the demand for a product like that described above, for surely if it were explained well, the average retail investor, would appreciate the diversification benefits associated with investing in a commodity pool(s).

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    It might need to be emphatically harked upon, that one's managers/approaches are sound, since unfortunately some studies have shown s&p like or sub, performance for commodity investment indices, however, there's always trend breakers in every "space", and perhaps this could be emphasized.

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    Either way, perhaps there is an opening within the market for a more complexly-constructed yet at the same time simple to disperse commodity type investment, that could be of use the to the average retail investor.

    Jun 26 1:55 PM | Link | Comment!
  • One If By Land Two If By Sea(NMM & SNH)

    To briefly sum up this surf and turf play. Investing in 1 for 1 per se; NMM and SNH, yields one with an interesting amount of qualitative diversification, and some perhaps somewhat welcome quantitative(metric based) diversification aswell.

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    NMM as discussed in a previous post; is a somewhat well known shipping company. It earns its dividends off of the profits that it earns above a baseline rate for leases based on a per day basis. It has a healthy fleet of ships/boats as can be seen from its website(http://www.navios-mlp.com/Fleet/default.asp). There is a threshold involved in its profit distributions but surely these are kind of specific/arcane and may not be interesting/pertinent to this play in general. Maybe they are, however, I'm not sure if going to into that is really necessary per se. They can however be seen on the above link provided.

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    SNH is as grounded as one can get. They also own an impressive armada per se, however, they own retirement related communities/apartment buildings. If one goes to their website; (http://www.snhreit.com/locations/view.aspx) one can get a better look at this; but most of them are located in the mid Atlantic region/ "old" USA per se; with a smattering going westward. They also have quite a presence in semi-old "Jacksonian" America namely the Appalachian region per se; namely Tennessee, Kentucky, the second areas of America to be colonized.

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    Why is this grassfed beef and mahi mahi a tempting addition to one's buffet of capital allocation; well one could look at this from several perspectives. If one is unsure of future global trade/shipping demand; then one may be concerned by the future of NMM. However, at the same time, everyone likes high-yielding stocks per se(presumably).

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    Hence to balance out these concerns without picking up a sextant, one may simply go dollar for dollar with an investment into the brick and mortar assets of SNH.

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    Demographics don't change as quickly as global demand. With the reality behind China's economic data always being some-what of a kaleidoscope of fact and fiction, future global trade patterns are always a big question mark. With much of the world's youth un/underemployed, future demand is always shaky, and the thought of import and export, on that common-man level(non-industrial demand) is somewhat unsure.

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    However, perhaps one can hedge the high-yielders of global trade, with the steadfastness of old age. With SNH's reliance at least in emphasis per se, on those who happen to have the most assets in developed countries at the moment; namely those of "senior" status per se(age wise); it may be wise to hedge the unsureness concerning consumer demand with that which is sure to be demanded; and which can in turn hopefully/presumably be afforded, namely senior living.

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    When one does go 1 for 1 with this investment one ends up with a hybrid investment with a beta or around 1.1; and a yield around 9-9.5%. It's arguably not too shabby for the diversification involved; and perhaps even if one is drawn out by the sirens of the sea(high yielding NMM), its always wise to keep one foot on solid ground(NYSE:SNH) to make sure that one doesn't end up cursing one's investment decisions like a sailor; and seeing one's capital vanish like the Flying Dutchman.

    Jun 20 2:28 AM | Link | Comment!
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