1/11/2015 – A mixed day with the Dow Jones up 52 points (+0.32%) and the Nasdaq down 6 points (-0.12%)
While the US stock market is massively overpriced, Russian market is being sold at give away valuations. Here is another way to look at it, the capitalization of the entire Russian Stock Market is equal to that of Apple (AAPL). Both are at around $540 Billion.
I continue to maintain that Russia is the most undervalued market in the world. Let’s take a closer look at their 3 year chart – represented by (RSX)
A number of things become immediately apparent.
- RSX remains in a clear long-term technical downtrend. There is nothing to suggest that the market has shifted gears into a bull leg.
- RSX might be putting in an important double bottom. And if this double bottom holds, RSX might soon start its Bull Market.
- The RTS collapsed 75% during the financial crisis and the bear market of 2007-09. Our mathematical and timing work indicates that the US will have a severe bear market between 2015-2017. If so, Russian market is likely to continue with its downtrend.
Which interpretation is correct?
It is too soon to tell. Yet, if you are long-term investor (3-10 years) I believe Russia represents an amazing buying opportunity. On valuation basis alone. It can’t go to zero and sooner or later this market will recover. And considering today’s valuation levels any such recovery will be spectacular. Most likely at 10X or more.
Further and if I may, I would like to suggest a possible trigger point for the Russian bull market to start. Last week I wrote Endgame In Sight: Putin Declares War On Saudi Arabia. Will The US Respond?
If Mr.Putin is able to bring “The House of Saud” down, plunging Saudi Arabia into the chaos it deserves, the price of oil should immediately recover. Stabilizing the Russian Economy and giving RSX the pretext it needs to start a multi-year rally.
For now, it might be a little too early to invest in the Russian market. However, this investment opportunity should definitely be on your radar screen. Even in your portfolio if you are a long-term investor.
Fun fact: the Russian market is still up 2,600% from its 1998 crisis bottom.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update.January 11th, 2016 InvestWithAlex.com
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