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Choose: 42.5% Yield Vs < 1% + Poss Confiscation / Spat On In Street

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A recent Moneyweek (14 March) "shares in focus, Gamble of the Week" column featured a company that not only supplies 30% of European gas needs, but whose mother country sits on the border of the world's largest consumer of coal. Crucially that latter country finds itself desperate to placate a population choking amidst the smog of its own economic success and thus keen to ditch coal and burn something cleaner. So whilst it is true to say that the company in question, Gazprom, may well find itself unloved by its current customers, it has substitutes ready and waiting in the wings.

That same company also has an earnings yield of 43.5%. It pays out a small fraction of this, which some might consider scrooge-like. On the other hand, analysts are usually big fans of companies that can cover their dividends many times over with earnings. Besides, the dividend yield of Gazprom is still more than twice the savings rate here: 6.3%

Now, I know what you're thinking : this is basically Putin's company, so whilst it might be safe in itself, how do we know, as Brits, that Vladimir won't use us as political pawns in the Crimean "situation" and do a TNK on us, basically robbing us of our shares?

Fair point. After all, we are Brits, and Cameron has been saying some pretty hurtful things about Vlad and his mother country.

But what if we were Russians? What if the name on the share register was , say, Abramovich?

Does that make the investment sound more like the sure thing it seems from the figures alone?

Or maybe, as a Russian, you'd prefer to invest in an asset with a less than 1% yield?

Maybe, as a Russian, you'd prefer to buy an asset, not on a price to earnings ratio of 2.3, like Gazprom but on a PE of >100?

Maybe, as a Russian, you'd prefer to buy an asset priced in a currency much stronger than your own, so your money doesn't go nowhere near as far.

Maybe, as a Russian, you'd wait to buy that asset until your currency had slumped to a five year low?

Maybe, as a Russian, you'd buy into an asset that economists agree stands at ludicrous valuations?

Maybe, as a Russian, you'd buy an asset where you, as a Russian, became the target of heated rhetoric concerning asset confiscation?

Maybe, as a Russian, you'd buy an asset in a country where other Russians had already had that same asset seized?

Maybe, as a Russian, you'd even choose to make your home in that potentially hostile country, a country awash with immigrants whose own countries are hostile to yours.

Maybe, as a Russian, you'd be happy to trust those immigrants, not to spit in your wife-what-does-lunch's food when she dines out, or openly abuse her in the street (because, gawd bless her, she does so love to make herself the centre of attraction with conspicuous displays of wealth).

Think you know the answer to what you might do? If you are anything like me, you apparently don't know jack : Russians pour money into London property

So returning to me being British and my thoughts on Gazprom, I ask myself this: why do I think I'll lose money in Gazprom, whilst these Russians see london property as a sure thing? What do they know? How do they know it, and on what authority?


And when does careless talk become treason?

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More brilliant Moneyweek investment advice - theyve been pushing Russia quite heavily over the last year.

Good ole' Merryn and the team.





And there's plenty more but I got sick of posting links.

After their gold buggery and impending crash of the UK, one could be forgiven for thinking that Moneyweek is financed by the same people as Russia Today.

The Keiser Report is still the best programme on TV anywhere,

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If you'd read the article you would not have posted that link. These new lot aren't just billionaires, they are professionals - doctors etc - buying £1m and £2m properties. I'd respectfully suggest that's less a case of diversification and more of a brazen "all in".

And I return to my question and throw it out specifically to you: how many gazprom shares have you bought, Mr Diversification?

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'This means that in effect the state controls some 60% of the market because the Russian oligarchs will follow Kremlin's lead - simply to preserve their wealth and often their freedom (Khodorkovsky, who has been a leading financier of Russian opposition parties got 14 years in prison a few years back). In fact the situation could be getting worse as the oligarchs have bought additional shares in recent weeks to gain an even greater percentage of the market.

And just in case you are still considering making a long-term strategic investment into some Russian shares, remember that minority shareholders can be squeezed simply by not being a member of the elite "club" - see this story for example. It's no wonder that analysts have now labeled the Russian stock market a "frontier" rather than an "emerging" market (similar to many African markets except for poor economic growth - see story)'

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Do a lot of the people buying UK property have dual nationality or maybe they anticipate doing so. So they're actually British or at least apparently so within the meaning of the word in the UK these days.

Edited by billybong

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  • 407 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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