While some use political and financial crises as an opportunity to buy stocks at deep discounts, something veterans of Wall Street call “bottom fishing, ” winning investor Jim Rogers wouldn’t recommend it in the case of the Ukraine. The Singapore based manager of Rogers Holdings and Berland Interests thinks its a bad idea to buy Ukranian stocks on a decline, because the stocks could go lower and lower, especially given the vast uncertainty in the region. Even at the best of times, Rogers had this to say about investments in the Ukraine, “I’ve been to the Ukraine twice in my life and I’ve never been impressed by the government or the management of the Ukraine. You don’t buy something because it is low, because it can go lower and lower and lower.”
“If you’ve looked at the Ukranian government over the past 10-15 years, you know what I’m talking about.” Rogers identifies an important principle in bottom fishing. The stocks have to be damaged, the negative catalyst has to be external, but the underlying health of the government or business has to be sound and have some hope of upside. Suffice it to say, Rogers is not optimistic.
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Just to give the other side of the equation, Mark Mobius remains bullish on Ukranian stocks, writing in March that despite the political problems, Ukrainian stocks have returned a surprising 20% gain for the year. Mobius, Chairman of Templeton Emerging Markets Group, said, “My team and I continue to be interested in Ukranian equities where we see opportunities on the individual and company level.”
So investors, take your pick. Is Mobius right or Rogers?