The Hated Stock Market That Beats The USA

Apr. 26, 2017 5:45 PM ETRSX, RUSL, RUSS, ERUS, RBL35 Comments
Rob Marstrand profile picture
Rob Marstrand

There's a currently hated stock market that's still performed better than the US over the past couple of decades. Right now, it's dirt cheap and has a high and rising dividend yield. Despite this, practically every investor detests it, usually based on false perceptions. That market is Russia.

I know… I know… About 99% of you have been told endlessly since birth that Russia is evil. Russian business is inefficient. Russia is a failed state run by a dictator.

But bear with me on this one. I also grew up immersed in cold war propaganda, and continue to see the very poor coverage of Russia that continues to this day. But when it comes to investing, it pays to keep an open mind.

If all of the negativity was true, then you'd think that Russian stocks would have been a dreadful place to invest. But actually they've done very well over the long run, admittedly with some pretty hairy volatility at times.

They've also done well in the shorter run. The last time I wrote about Russia was in August last year (see here). It was an update on a previous recommendation to buy Russia dating back to March 2015. It was already up 21% over 17 months. Dial forward another seven months and the total profit is 33.5%, including dividends, over a tad more than two years. But I think there's a lot more to come.

Now I'm not naively saying that Vladimir Putin is some kind of angel. For starters, he's a politician. But there certainly has been an economic transformation of Russia while Putin has been in power, and it's not over yet. That transformation shows up in the performance of the Russian stocks.

The following chart compares the MSCI Russia index with the MSCI USA index

This article was written by

Rob Marstrand profile picture
I’m Rob Marstrand, the founder of OfWealth. I publish investment newsletters for private investors, always written in clear, non-technical language. I spent 15 years at UBS Group, the global investment bank, based in London, Zurich and Hong Kong. Then, for five years, I was Chief Investment Strategist at the US-based Bonner & Partners Family Office. Now I live in Buenos Aires, Argentina. Given its chaotic history, Argentina is the perfect place to learn how to survive and thrive in times of crisis.

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