Last December, we wrote this article Russia – Scary but Too Cheap to Ignore Honestly, we got quite a few negative responses from it as people thought Russia was “uninvestable.” This has also been the general sentiment by many market “experts.” At T&T Capital Management (TTCM), we are long-term deep value investors. By nature, we are contrarian. Our best ideas are almost always the ones that people think are the dumbest at the time. While the Russian ETF, which we own in many accounts is up nicely, some of the Russian stocks we’ve bought such as Lukoil, Gazprom and Yandex are down. These stocks are incredibly cheap and while we would never invest too heavily in Russia because of some of the risks in that form of government, I believe in the long-term we’ll do really well in all of these investments. It is also important to note that we are early in the process with Russia. Sanctions are still in place, oil prices are still incredibly low, and now the country is involved in wars in both Ukraine and Syria. I believe we’ve seen the worst of the oil selloff and I believe Russia’s efforts in Syria could ultimately create the environment where sanctions are eased. As the economic picture brightens, Russian stocks could be by far and away the best performer over the next few years as is the cheapest stock market by a wide margin.
It has been an extremely difficult investment environment for just about everybody, but I really believe we have planted the seeds to be able to make strong returns even if the U.S. stock market doesn’t do that great over the next few years. This would not be the case if we were in broad-based ETFs, mutual funds, or a basic asset allocation strategy. This is why it is so important to think long-term and keep your investment time horizon in mind when you are investing. So many people will chase whatever the hottest fund or investment was over the last year, but this is the biggest blunder you can make aside from panicking, which is also disastrous. Focus on longer-term returns and the better you understand the basic strategy, the better. In my past life when I worked at other companies, you have no idea how many absurd products that I saw pitched to people. A few disgusting CTAs charged 5-8% commissions a month. It is impossible to make money when you are paying that much in fees over any long-term time frame. Believe me, there are a lot of tricks. Many fund managers run many small funds with different strategies and then just market the one that did the best over the last year or two, while ignoring all of the losers. This is why we built our company based on following the time-tested strategies that have been used by the most successful investors in history.
We are talking about guys like Warren Buffett, Benjamin Graham, Martin Whitman, Bruce Berkowitz, Prem Watsa, etc. How many day traders are on the Fortune 500 list? The answer is zero, but there are a lot of people that make money selling classes, newsletters, etc. As always, please let me know if you need anything or have any questions whatsoever!
The Market Vectors Russia ETF has returned 18 percent in 2015, the best performance among 776 U.S.-domiciled exchange-traded funds with assets of at least $100 million, according to data compiled by Bloomberg. Seven weeks ago, it trailed more than 260 of them, having slumped 1.6 percent for the year.