Russian stocks are worthless.
Thanks to crippling sanctions, no one in their right mind would touch these stocks.
But we have to remember what Sir John Templeton and Baron Rothschild taught us.
In 1939, Europe was just about decimated. So, Templeton bought every European stock trading below $1.00 a share and made a fortune. In fact, he bought shares in 104 companies for about $10,400. He would make a fortune. He taught us to buy excessive pessimism.
Baron Rothschild once told investors, “The time to buy is when there’s blood in the streets, even if the blood is your own.” He knew that very well, considering he made a small fortune buying the panic that followed the Battle of Waterloo against Napoleon.
Whatever your opinion of Russia may be at the moment doesn’t matter.
What does matter is that its nearly worthless stocks could eventually come screaming back, once this war with Ukraine is over, and things get sorted out.
For example, Russia’s biggest bank, Sberbank just watched its shares fall more than 99% over the last few weeks. “The bank, which recorded assets of more than $500 billion as of December, had a market capitalization of more than $102 billion six months ago, according to Dow Jones Market Data. It is now less than $190 million, based on a total extrapolation from the London listed-shares,” according to Barron’s.
Weeks ago, SBRCY traded around $22, it’s now at 52 cents – destroyed.
Miner stock, Polymetal International has seen its stock price decline 77%. “It may mine gold, but its main customers are Russian banks who sell it on to international gold markets, and with the corporate world increasingly freezing out Russia’s financial sector, investors are fleeing,” said analyst Susannah Streeter of broker Hargreaves Lansdown.
Weeks ago, AUCOY traded around $18. It’s now at $2.70 a share.
The VanEck Russia ETF (RSX) fell from about $25 to $5.65.
The damage has been done. Should the situation get better, these down and out stocks could stage one heck of a rebound down the road.
Time will tell.