Stay Strong, Go Long – Bulletproof Russia Becomes Contrarian Haven

It’s a tough road being a contrarian on Russia. This is especially true today when the entirety of the U.S. and European political system is aligned to demonize Russia at nearly every level.

  • Tom Luongo

And the main reason for this is that Russia under President Vladimir Putin refuses to do the West’s bidding both at home and abroad. The central tenet of U.S. foreign policy is that U.S. concerns, no matter where they are, are supreme and everyone else’s are subordinate.

Russia under Putin doesn’t play that game. He hasn’t for nearly twenty years now. This is not to say, of course, that objectively speaking Putin is a good man or even a good leader. In studying Putin for the past seven years I’ve come to one inescapable conclusion.

He was exactly the leader Russia needed to dig the country out of the abyss it found itself in when he took over. He is exactly the kind of leader Russia needs to guide it through the next period of history.

So much analysis of Putin and Russia is so thoroughly ideologically tainted that, on that basis alone, it should be dismissed out of hand. And it has been successful enough that even the best analysts who are truly skeptical of the U.S. narrative still get some of the basics about Russia and Putin horribly wrong.

I’ve been recommending Russia as an investment to people since early 2015 and its state-owned gas giant Gazprom (NYSE:OGZPY) since mid-2014. I haven’t wavered in that recommendation, despite the ups and downs.

And the reason for this is simple. While markets do not trade on fundamentals every day, over the long run a market’s or stock’s fundamentals do eventually overcome sentiment and assert themselves on the price.

So, in 2014 when oil prices collapsed so did the price of Gazprom. The ruble went through a crisis intended to oust Putin from power in revenge for his thwarting the U.S. takeover of Crimea.

Putin’s deft handling of the ruble crisis and Russia’s impeccable national balance sheet allowed both to survive and begin digging the country out of the latest hole placed in front of it.

Since then the U.S. has piled on obstacle after obstacle in front of Russia in the global marketplace for capital. The Magnitsky Act has been used like a bludgeon to scare investors away from the land of the Evil Putin.

False flags and overt provocations to war in Syria, Ukraine and the U.K. have slowed the pace of investment in Russia’s capital markets. Gazprom for years languished both because of the political risks of U.S. pressure in Europe to stop first the South Stream and then the Nordstream 2 pipelines.

Frivolous lawsuits from Ukraine, the EU and the Baltics have dogged the company for years. The EU has changed its laws to retroactively try and gain a legal upper hand on Gazprom’s pricing of natural gas. But, ultimately, none of it has worked.

Slowly, but surely, Russia’s fundamentals and its stable and improving political situation are winning the hearts of investors looking for yield in a yield-free world. …


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