Question for Jun

[Gaybutton]

I consider Jun to be our resident expert on finances, investments, international, etc. Meanwhile I know and understand virtually nothing about any of it.

That being said, here is my question for Jun: Hasn't the Russia-Ukraine conflict and the sanctions rendered the Russian Ruble close to worthless? If that is the case, would it make sense to buy up Rubles now, figuring that sooner or later the conflict will be over and the value of the Ruble will start rising again? If that is what is likely to happen, is it likely that a lot of money could be made by taking advantage of the current situation, buying Rubles, and later selling off the Rubles once there is some value to it again?

Am I missing something? And if buying Rubles now is actually a good investment, how does one go about physically buying Rubles? And then, once you have them, how do you store them until the time is right to sell? And how do you sell - just go to an exchange booth?

[Jun]

I know that I don't know enough to trade currencies.

If I buy shares in a company, there's an underlying average return from the profits, economic growth and so on. So all I have to do is avoid overpaying for overhyped stocks (Tesla etc) or buying stuff that's about to fail.

If I invest in currencies, there is usually no underlying return in an era with low interest rates. There are transaction losses. So to make any profit, it relies on me knowing more than the professionals who trade currencies for a living. That's too difficult.

Or compare it with betting on horses. On average, it's a loss due to the bookies profits. Admittedly, there's slightly more judgement in currencies than horses, but look at who else is on the other side of the forex trade. Do we know more than they do ?

Admittedly Putin just put up interest rates.

As for your thesis that sooner or later the war will be over, I suspect that is correct. However, I think it's all the international sanctions that are killing demand for the Ruble. Those sanctions are likely to be around for a long time. There might be a modest rebound at the end of the war, but whether that potential return compensates you for the risk is a question you need to think about.

I don't recommend this at all, but if you really want to, I suggest your options are:
1 Google "trade USD/RUB". When I do that, the results are mostly from reputable companies, including those listed on the London Stock Exchange, such as IG and Plus500. There are probably American equivalents. Make sure you pick a reputable one, understand the costs & leverage risks and open an account there. You ought to get the interest payments as well, although there will be costs.
2 Pop down to a TT foreign exchange booth in Pattaya with a wad of cash.

I suggest #2. Although there will be more friction costs, you can't come unstuck with leverage and you won't speculate with a large sum.
#1 might be better if you're prepared to do a lot of work and calculate the costs of all this. Which you have to do if investing a significant percentage of your liquid assets in this venture.


Now I HAD a small percentage of assets invested in Russian stocks, via JP Morgan Russian Securities. I sold the whole lot about 3 weeks ago, as I figured that western sanctions would involve freezing Russian assets, which could lead to reprisals which would leave my holding at near zero value. That was beyond my risk tolerance. Despite thinking Putin was bluffing with the troops on the border, I sold. Just in case I was wrong.
Actually at a profit, although far less than it could have been selling 6 months ago & the money would have been better invested elsewhere.

In my opinion, for someone living in Thailand, the first place for any investment ought to be a Thai or Asian stock market fund. That's on the basis that your spending is in THB, your income is in USD (or whatever) and building a nest egg in THB cushions you against any currency movement.
That's REDUCING exchange rate risk, which is probably what retired people should aim to do. Including myself.

I'm a self funded retiree, currently spending 25% of the year in Asia, with ambitions to increase that.
Excluding my house, over 40% of my assets are in Asia.

[Gaybutton]

Thank you very much Jun. Your response is exactly why when I think I might have found a "get rich, but not necessarily quick" idea I definitely consult you before doing anything.

Looks like I missed a lot more than I thought I missed. Based on what you say, for me that idea has now been axed and I'll be keeping my money in my wallet (along with keeping that sacred 800,000 baht immigration still requires for the retirement visa). Trying my little scheme turns out to be much too complicated and risky for me.

Oh well . . .

[pong]

Realise that quite often-there have been more such internal wars/conflicts, like in Old-Yugoslavija, the old money will be simply declared worthless and only those who can prove (locals) they got their legal savings/whatever from before may get a refund in new money-very often much less as the old was worth. I think even the current RUR is already the 3d since communism fell. They call that ´money washing´ here. This is also a well-proven way to pay for the expense of making war.
Russia is in many respects still a self-standing island economy: they do not depend very much on imports, so for locals the value in US$ or € does not matter that much as long as you keep inside.
Besides that- the only effective way to lay your hands on the money is going to BKK or an exchange in TH and take whatever they have in stock-but 99% of Russky people travelling abroad do not take cash RUR, as they know its worthless, but already change to real ´valuta´ before they leave, i.e. IN RU. As do the Indians or South-Africans or others with monies that they know is very hard to exchange once out of own country

[Jun]

As with everything, I might be wrong and a Rub trade could work out.

I would still leave that kind of speculation to George Soros and look for something safer.

[whitedesire]

My take on this.

As per Jun's text on this, I would forget currencies, it's a mug's game (he didn't say that of course, he said "difficult"), you need to be a psychologist to work it out, as you do with stocks and shares sometimes. You need to be very savvy working out whether a company is worth investing in and as Jun said "overpriced" comes to mind, especially with regard to the US stocks, and they still keep going up.

However, the stock markets over the world have basically crashed since Xmas, the question is how much "lower" will they go. Here in the UK the FTSE 250 has lost quite a bit, but the FTSE 100 is sort of holding up.

Going back to how low .... we know from experience what goes up must come down and vice versa. The good old trackers are good ways to invest as you can review on the media each day how the world markets are faring, it's a long term goal and when I say long term I mean 5, 10 years or even more. 6 months, 1 year or 2 years is no good.

The best way I find is to drip feed into these stocks, that way you pick up the low prices as well as the high prices. If you have a lump sum obviously then it would be better to invest when stock markets are low - how low is the million dollar question. I don't think the world markets have bottomed out just yet though. If you remember the last crash around the beginning of Covid here in the UK, or 2008, when they bottomed out, whoever put their money in the markets made a substantial profit.

Some markets around the world are just plain crap. I don't like naming them and you might guess but one country in Asia had deflationary problems and a crash of their market and it never really went up again even to this day.

Bottom line, good if you can get in when the markets bottom out or drip feed and trackers are easy to follow.

You need to be really experienced at stocks and shares like Jun is, if you want to diverge into, for instance, emerging markets, new companies etc etc etc, technological (look at the dot.com bubble).

What is upsetting in my opinion is that now inflation has reared it ugly head, the safe havens are also losing ground, the only safe place is Gold and event that has only marginally gone up and goes down as quick as it goes up. With regard to oil stocks, they are volatile, in 3 days they have gone up 20 dollars a barrel, they could also go down as quick.

Good luck on investing whichever way you choose.

[Jun]

Some markets around the world are just plain crap. I don't like naming them and you might guess but one country in Asia had deflationary problems and a crash of their market and it never really went up again even to this day.

I agree with almost all of what you're saying, although I do need to comment on this part.

I guess you're referring to Japan. As many may remember, they had a massive bubble in stock market prices, which peaked around 1989.
As valuations were crazy then, anyone holding for the next 20 years lost money.
However, returns over the last 10 years have been fine. Which they tend to be, if the valuation is attractive when purchased. I've had a few percent of the portfolio there for just over 10 years and it's done OK.

For me, the key lesson from Japan is to avoid entering the market near the peak of a bubble.
So no US stocks for me just now.
https://www.multpl.com/shiller-pe

Moving on to emerging markets, for anyone living in Thailand, or spending a few months a year there, that's an "Emerging Market".
I would argue that moving from (say) 100% invested in your home market (US, UK, or whatever) and adding some investment in a good "Emerging Asia" fund is lowering your risk.

[whitedesire]

Bit worried at the moment Jun, although my funds are split between cash funds, equities and bonds, they are all going south, apart from cash, I'm in my final year before retirement. Hindsight is wonderful, I should have moved the lot to cash last Xmas.

I'm just wondering like all of us as to how this Ukrainian Russia problem is going to pan out.

[Jun]

Hindsight is wonderful.
I've sold quite a few things that were on crazy valuations in the last couple of years & watched most of them go far higher. Then of course, all the stocks on crazy valuations tend to fall the furthest when there's a correction. So after looking stupid for a while, those sell decisions start to look good now.

I am retired, for over 3 years. I've got 71% in stocks, 12% in precious metal (almost all gold), 14.2% in cash and 2.6% in a short duration US treasuries ETF (effectively a way of putting some of my cash in USD). The cash is mainly GBP, with some SGD as well.
I am likely to increase the percentage in stocks, once I identify something suitable.

I retired early. I just plugged my age into a life expectancy calculator & on average, I've got another 29 years.
Achieving the average is, of course, not guaranteed. As we were reminded by the sad death of a 52 year old Aussie legend in Ko Samui this week. (I'm pleased and not at all surprised to see he has been offered a state funeral back home).
However, the budget process must also allow for an above average lifespan. I've got a 25% chance of lasting another 37 years.

Now with inflation getting out of control, putting it all in cash is likely to be a disaster, when I need to budget for another 30++ years.
With RPI at 7.8% and the best savings accounts paying ~2%, my money would lose 40% of it's value every 10 years and that's without even taking any out. If I spend 3% every year, almost 60% would be gone in 10 years.

UK annuities are also a disaster, with very low payout rates and inflation indexing typically capped at 3%. Plus that would put all my money into GBP, which adds too much exchange rate risk when I'm fond of spending in other currencies.

I think the old advice on the ratio of stocks to bonds as a function of age is way out of date, as it's not been adjusted for longer life expectancy or near zero return on bonds.

I'd be interested to hear how others intend to approach the issue of managing money in retirement. I sometimes learn something from such discussions.

UK life expectancy calculator:
https://www.ons.gov.uk/peoplepopulation ... 2019-06-07

[Gaybutton]

UK life expectancy calculator

Hmmmm, according to that calculator I died a week and a half ago . . .