Friday, June 16, 2006

The Volatility of the Russian Stock Market

The Russian stock market has taken it on the chin over the past six weeks or so. For example, the Russia RTX stock index (see the chart below) has fallen from an intra-day high of 2955 on May 10 to a close of 2105 as of today. That is a drop of 28.7%!

However, the index is still up substantially over the past 52 weeks. It closed at 1057 on June 16, 2005. That is a gain of 1048 points, or 99%. It amazes me that the stock market index for country as big as Russia can be this volatile.

I personally will continue to invest in Russia stocks via the Templeton Russia and Eastern European fund (symbol: TRF). However, I will continue to limit TRF to no more than about 3% of my long-term portfolio.

3 comments:

nyc money said...

Hi Jim, I've been invested in TRF for little over a year and a half. When I first bought it, it was kind enough to drop 30% in two months. But I stuck my head in the ground and continued to hold it, after awhile it rebounded, and surged in a matter of days last fall. I have continued to buy more of it, and TRF is now 10% of my portfolio. Along with the very nice dividends that the fund gives me, it is my best performer. This is one of those funds you really shouldn't look at more than 4 times a year, or you'll want to kill yourself.

Jim said...

I think that Russia is one of the best emerging markets in which to invest. They have an excellent education system and a good infrastructure.

I remmeber looking at TRF back in 1995 when it was first introduced because I had read an article about the manager, Mobius, in Kiplinger's or Money magazine. It's amazing how well TRF has performed considering that the Russia currency collapsed in 1997-98.

makingourway said...

nyc, i agree with you whole heartedly!

I've been thinking about getting in on it (limiting it to 3% as jim recommmends), but am concerned it might still be too high.

Good point about hte currency, too.

Any thoughts anyone?

regards,
makingourway