“Russia’s MICEX Index looks cheap after falling dramatically this year and could be a good investment compared to holding shares of the technology giant Apple, Paul Gambles, managing partner at the financial advisory group MBMG Group, told CNBC.,” Matt Clinch reports for CNBC.
“‘You’ve got to look at valuations,’ he told CNBC Monday. ‘To me, at those sorts of prices, it’s starting to look like there’s a – speculative admittedly – high risk opportunity,'” Clinch reports. “‘There’s a play on Russia just because of the pricing. I’d rather own Russia than own Apple, frankly.'”
“The market capitalization of the MICEX currently stands at 20.40 trillion rubles or $350.14 billion, which compares to Apple’s figure of $655.57 billion,” Clinch reports. “The price-to-earnings ratio – an important metric used to gauge stock valuations by some analysts – is 17.38 for Apple, according to data from Reuters, and an average of 5.97 for the MICEX. A lower number is seen as a better investment by many equity analysts.”
Read more in the full article here.
MacDailyNews Take: You know what they say about opinions.
sure, of course, because what could go wrong in russia right now?!
It already went wrong. And now the stock is super cheap, so this guy is right. The currency has already recovered from the bottom, it is thirty eight percent up.
However, Apple also has growth perspective, so why not own both?
saudi arabia announced today (yesterday?) that they weren’t going to reduce oil production. so with all due respect for your position, i suggest there is a possibility that you have your verb tense wrong! thx for the comment.
Of course, there is always a possibility that thing could be worse.
However, this particular event such as Saudi Arabia stating that they are not going to cut oil production is not essential since they already stated that earlier and it is already taken into account the current oil price.
Good luck with that choice!
In his spare time he likes to try to catch falling knives.
You want to get poor fast, listen to this guy.
It’s as if he is saying, bet on getting struck by lightning, by taking a high risk insurance policy.
Do it! Do it! Do it!
It’s on CNBC, so must be top advise.
When you price in Putin’s gulags and territorial ambitions, Russia is a steal.
The GULAGs of today, unfortunately, is in USA, where millions of incarnated people are made to work at $.30 per hour because private jails coarse them to do so by imposing insane fees for even such basic things as phone calls. Russia still has jails where people work, but its scale is quite small comparing to what USA does.
As per territorial ambitions, there is no such thing. Russia could have easily take over Ukraine with their illegal “government” and half of the country not supporting it. But it decided not to do so.
Right…Putin only took over the Crimea region and invaded the western areas of the Ukraine. That’s practically nothing! /s
No such thing? Are you nuts?
I agree that there are too many people incarcerated in the U.S. And I also dislike the private prison systems, but you should be very cautious when using a term like “gulag” lest you sound like an idiot. Do a bit of historical research and you will note stark differences between U.S. prisons and gulags.
1) Crimeans never thought of themselves as Ukrainians, so it is not like “Putin took over the Crimea” — people wanted that. The territory was transferred to Ukraine illegally even under USSR laws. This is the reason why Ukraine still has to demarcated legal borders, registered with in UN.
2) Putin never invaded even Eastern parts of Ukraine, let alone Western. Every time illegal puppet “government” has cried “invasion”, NYT journalists travelled through those territories and found no Russian army; only rebels. However, of course, Putin does support rebels, and he is right in doing so. They protect their rights from illegal authorities that attack their land with tanks and balletic missiles, killing thousands of civilians.
3) “you should be very cautious when using a term like “gulag” lest you sound like an idiot” — you should read original comment to which I replied to find out who was using “GULAG” term first lest you sound like an idiot. (Of course, neither in USA, nor in Russia, system like GULAG exists; those are different systems.)
Sir, given the garbage you have just been spewing, I don’t think you should be advising anyone on how not to “look like an idiot.”
So basically, he rather buy a country that has problems and debt everywhere, that once you buy it you have to return the profits to its shareholders entirely in the form of public services.. You prefer that and not to buy a company that can buy all that and also give you money.. And also a company that makes money more faster than the rate russia is losing money.
Interesting.. In what mental hospital are you “guess”?
The country had third biggest monetary reserves in the world and stock market that is super cheap due to market speculations and politics. So buying Russian stock is super smart. However, as I wrote above, Apple’s stock is also cheap, so it is not “either or” situation.
buying Russia is super smart if you enjoy catching falling knives.
Saying it on TV just to slam Apple, and doing it for real are two different things. He looks foolish, but some people will always believe what they hear on TV.
Analyst. Say no more.
” $350.14 billion, which compares to Apple’s figure of $655.57 billion”
No comment.
I’d rather LIVE off 1 Infinite Loop then have you as a Financial Advisor!
I don’t know about that, but I do know about this…
I think this is bad investment advice, but there’s some logical (if flawed) reasoning behind it. Russia is undervalued now and Apple is very highly valued now: so (theoretically) Russia has greater growth potential over Apple.
This line of thinking, however, demonstrates the main problem with the entire “buy low, sell high” investment strategy. When a stock grows or loses value, there’s usually reasons why that happens. And whatever the reasons may be, they are likely to keep affecting the stock’s value the same way.
Finding a stock that’s undervalued for no good reason, and scooping it before the rest of the market realizes it – that’s an fantasy. For every example of that actually working you’ll, find many more that examples of underperforming stocks that keep underperforming.
A more effective strategy is Momentum investing – buy winning stocks while they grow, and sell losing stocks before they lose more.
Blackberry has greater growth potential over Apple as well… practically nowhere to go but up. Buying Russian stocks might make sense to HIM, a professional investor willing to take risks and (presumably) supplied with good information before the rest of us. I constantly find it amusing how Apple haters – whether they are financial pundits, fandroids, or Apple competitors – are constantly using Apple as the standard of comparison. You don’t see, for instance, Microsoft running ads during football games that compare the Surface with a Chromebook. Every time an Apple hater uses Apple as the standard of comparison, they reinforce the fact that Apple is the leader and the gold standard.
So is this guy going for the stupidest person of the year Nobel prize!
But his advice assumes things will just get better in Russia. That is not certain at all. given the low price of oil, the mess in the Ukraine and Europe’s reaction against it and Russia’s other hostile maneuvers, and the fact that Putin seems to insist on putting Russia in a dangerous place with his foreign policy decisions. While the stock may be up currently, next week it could crash back down easily.
Apple, OTOH, has the Watch coming out in the next 2-6 months, which will substantially boost it’s share price, as well as it it still trying to catch up to iPhone 6/6 Plus demand and hasn’t even finished its worldwide rollout yet.
Russia may have more risk/reward, but Apple isn’t far behind in the reward department with far, far less risk.
if you have access to good information, you could make money off Russia. But you could say that about any investment. You could have made a lot of money off Blackberry and Nokia stocks if you had a fair sense for where the bottom was and when the upward bounces would happen. For ordinary schmoes like us, I guess if you really want to make money off the Russian crisis you should wait still longer because that story is not over yet. The sanctions are compounding the pain of the crash of oil prices. For a foreign investor, the currency risk is significant as well. If someone held a gun to my head and forced me to invest in Russia, I would wait three months and then only put in as much money as I would be willing to lose, and also be willing to wait a couple years for a recovery. Then I would sell and never look back. Russia’s not going to go out of business but as those of us who lived through the most recent recession know all too well, the pain can last a lot longer than your ability to endure it.
Just because an article mentions Apple, does not mean it is worth reading/linking to…
Sometimes you want to also take a look at Price to Forward Earnings. Russia’s stock market came crashing down because conditions indicate huge reduction in profits and losses coming up.
If both Apple’s stock price and the Russian aggregate price were to remain frozen for the next year, we’d see Apple’s P/E drop considerably while the Russian P/E would skyrocket.
agreed. But, in the long run, gold will come back too. Of course, if you put money into gold in the 1980s, you would have waited 15 to 20 years for the big run-up that happened in the wake of the recession. Now we are back to the status quo, gold is only something to buy if you like pretty shiny things or you are a doomsday prepper. As an investment it is absolute shite.
It is very amusing to read comments from people that either don’t understand much, or are just big fanbois (and it doesn’t hurt if on the other side we have the big, bad Russia).
The article makes complete sense. The analysts reasonably argues that, if you can stomach high risk, there is a good chance you will clean up. In other words, if you put your money in AAPL, it will be rather safe (the downside is very low risk), but good part of the growth may already be baked in.
On the other hand, let’s look at Russia. Because of the recent events related to Russia, many foreign investors got spooked and bailed out. The main source of Russian wealth (natural gas) is still there, though, and isn’t going to disappear anytime soon. It is hard to imagine what could possibly cause that source of revenue to dry up for Russia. Therefore, it is quite logical that the existing crisis of ruble (and the Russian market) can’t really go down much further. Buying in today and holding for a while will likely bring solid returns, much greater than buying and holding AAPL for the same period of time.
While an investment in the Russian stock market index may turn out to be profitable in the long run, it really is not that hard to imagine what else could go wrong and tank its economy even further. Natural gas alone will not prop up the Russian stock market. Besides, Putin could decide to take over entire industries and further alienate foreign investment. Who knows what that bozo will do next?
I agree that Russia is a high risk investment – speculation would probably be a more accurate description – but risk is not always accompanied by return, especially in the short term.
“The analysts reasonably argues that, if you can stomach high risk, there is a good chance you will clean up.”
I, and probably many others, understood that very well. If I knew what Blackberry was up to, I could clean up on their stock too, by either going long or shorting. For HIM, investing in Russia might make sense. But where exactly are you going to put your money? Is there such a thing as a Russian index fund? If not, how are you going to pick the winners and losers that Comrade Putin is going to pick? Because that’s how it works in Russia. It’s a kleptocracy. It’s little different from the USSR except there’s no communism and they call the security services the FSB rather than the KGB.
if you can stomach high risk, there’s a good chance you will clean up at the casino. Or, you could lose everything you put into it. Crashing oil prices + a glut of petroleum with no end in sight in the near term + a glut of natural gas + sanctions + a kleptocrat economy with no serious rule of law + Putin’s foreign adventurism + the not-insignificant currency risk that could easily wipe out any gains = HUGE risk. Warren Buffett is well-known for an investment philosophy of buying when everyone else is selling and selling when everyone else is buying. He’s very very wealthy as a result. Of course, the other side of that is that when the bottom fell out of the tulip bulb market… it never really came back.
“The main source of Russian wealth (natural gas) is still there, though, and isn’t going to disappear anytime soon.”
No, it isn’t, but nobody (or, probably nobody) knows how long the petroleum glut is going to last. A well-known saying in investment is that a bear market can long outlast your ability to withstand it. Russia has a pretty substantial foreign currency reserve… for now!
Also.. Vlad the Invader won’t be making any threats to withhold Europe’s winter gas supplies, instead he will be happy for whatever cold hard cash Gazprom can get. As well, remember the pact Putin made with the business sector and billionaires: “You go make money and keep out of politics.” If the crisis persists for months, not weeks… how long will that arrangement last? Remember that USA is now a net exporter of petroleum. LNG export facilities in Louisiana will come online in 2015 and 2016. The world does not need Russia’s petroleum and gas quite as much as it did five years ago. $100/bbl oil could return by this time next year or sooner… or it could be a number we don’t see for a couple more years. If you have a crystal ball, by all means put some money in Russia and enjoy your fat returns. I’ll stick with Apple.
Shows you how dumb he is!