Thursday, March 17, 2011

Two Opinions on Investing in Russia

We were thinking about Russia last week, and it looks like Bloomberg was too:

"Peter Elam Hakansson of East Capital Group says the country is no more risky than other emerging economies and its stocks will beat those in rival markets by 25 percent in the next three years to reflect this. Fredrik Colliander of Carnegie Fonder AB says corruption and corporate governance concerns justify a discount to nations such as Brazil. The two have each returned more than 700 percent in the past 10 years."
That is absurd. Brazil is a total basketcase - there is no way that Russian corruption and corporate governance is significantly worse. Also, Russia has an average IQ of 96 and Brazil only 87, which is 0.6 SD, a huge difference.

4 comments:

C. Fischer said...

The corruption index produced by transparency international has Russia near the bottom, 154/178. Brazil is 69th.

On what basis do you think Brazil is worse?

CP said...

I have done business in Brazil, and my impression is that their legal system is barely functional. There really isn't any room for a country to have a worse system. Can't get any worse than zero.

whydibuy said...

Hey, we found common ground. People in this country are really clueless as to how good we have it here.
Most of the rest of the world is a complete toilet. Thats why the world lends us 2/3rds of all capital while we are only 1/20th the world pop.

These 3rd world investors come around every cycle only to get slaughtered and have their assets seized by some corrupt gov. In investing, everything old is new again.

CP said...

Yes. Mexican century bonds and social networking stock are one and the same.