Mulzar.com

The most beated down market in the world is no other than Ukraine, Russia’s neighbour. Ukraine has lost approximately 80% of its stock market value during the financial crisis. It takes me back to the days when Russia was almost going bankrupt. Russia had fallen around 90% when the BIG turn around came. If we have another Russia on our hand big fortunes will be made over the next decade. If the ukrainian stock market only performs half as good as russia did we have a big winner on our hands.

Lets review why Ukraine has plummeted the most:

1. Falling Steel Prices

2. Local Banking Problems

3. Threatened cutting of Russian Gas supply.

4. Real wages has started to fall for the first time in a decade making it hard for people to make their payments.

In other words it’s a dooms day scenario for Ukraine. On the other hand all the above factors are already baked in to the market. The Ukrainian stock market has lost 80% of its value, how much more is it going to lose?  When times are bad that’s when fortunes are made. I’m personally going to start by investing a tiny amount in a ukrainian “index” fund. I will hope for another tenfold bull run like the one between 2000-2006.

I’ve been placing money in severly damaged emerging markets like Africa, India, Turkey etc. But I have avoided Russia because the drop is too little, it has way more to go down before it’s a “bargain”. Russia has rosen heavily the last 10 years, a 30% correction won’t do the trick. I will wait for another 10-20% drop before I place any money in Russia.

I hope Yukos adds fuel to the fire so I can take a position cheaply as possible!

10,400 DOW Points for 2008 that’s my guess. I really  don’t like guessing where the bottom/top is, I would invest in the global market ( emerging markets ) at current levels if I had cash. Especially in the forgotten eastern europe countries such as Balkan & Turkey!

If I were forced to place my money in something and not touch it for the rest of my life I would easily put it in emerging markets. Even if big shots like Lloyd or Bank of America are trading very cheap you can’t deny the fact that the future superpowers will be India, China, Russia & Brazil. I’ve already placed a tiny amount in a turkish fund. I’m planning to place a tiny amount in Africa as well. In my opinion there is no money left to be made in western markets!

The GDP growth can’t be compared, the U.S stock market is still expensive if you compare the P/E ratio to emerging markets. China and India with its massive populations will have an insane growth for the next twenty years, so those cheap us financials doesn’t look that cheap in comparsion. I’m not saying they are a bad investment, why settle with less?

I remember a couple of years back when Telia Sonera, a Swedish “people stock” made their debut on the stock market. IPO price was somewhere around 85 sek. Now the stock has been bidded for, guess the price? 62.50 sek. More and half a decade has passed and the return minus inflation is way negative.

Sweden ranks very high when it comes to stock owners per capita. But it’s very important to mention that far higher then 50% of all Swedish Stock Holders owns either Ericsson or Telia Sonera, they both don’t create any share holder wealth whatsoever. I think we need a real definition of an investor, so we can really know how many people belongs to the investor class.

Here’s my defintion of an stock investor:

- Invests in Individual Stocks not funds.

- Don’t have 100% in one stock or several large cap companies such as Ericsson.

- At least have a return as good as the general index.

Amount of money in the stock market doesn’t really matter, the “style” is more important.

 Final comment: Close to a million swedes bought Telia at 85 sek in its IPO 2000. That’s alot of people buying a bad government stock, considering that there is only 9 million inhabitants over here!

DN

Foreigners might be familiar with Sweden being the model for welfare states, but the atmosphere for starting a business over here is just plain bad. I don’t have any personal experience, but many close friends all say the same thing “We’re not the ones cheating, the system is designed in a way that you have to cheat in order to survive”.

According to DN, three out of five small business play with their declaration. I’m not defending cheaters, but a part of it is to blame on the system.

You don’t really think about real estate opportunities when you hear Iran. Are we seeing another Moscow 1998? Ten years later Moscow is one of the most expensive cities in the world. No we don’t have another Moscow on our hands, why? Because the prices in Tehran is already way expensive by third world standars, it’s even expensive compared to Western markets.

“Negar Ehteshami just paid the equivalent of $6 million in rials in cash for a luxurious apartment. But it is not in New York or London. It is in the capital of the Islamic Republic of Iran. ” - Washington Post.

How is this possible? The year is 2005, A man is elected president he was elected by Iranians from working class families. Mahmoud Ahmadinejad’s promise was care for the poor. So what did the islamo-socialist do… he lowered interest rates ( yes, with rising inflation! ). The loan market in Iran surged, there has never really existed a loan market in Iran before. The effect on Tehran real estate was dramatic:
“

Real estate prices surged by more than 100 percent in 2007, after rising by about 65 percent in 2006 and more than 50 percent in 2005. Some economists see huge scope for the market to keep rising as, with interest rates below inflation, Iranians seek a store of value in property. ” - Washington Post.

With the rise of Ahmadinejad, he and the government cooked up a idea. It involved quick loans with low interest rates for people who would create jobs, instead people took loans to buy property. That’s not the only factor though, the annual demand for new houses in Tehran is far higher than the houses being built annually.

Here’s the ironic part. He screwed the working class of Iran and made the wealthy Iranians richer. A load of Tehranians mainly those who live in the north part have turned in to dollar millionaries recent years. I don’t really think the upper class iranians should thank Ahmadinejad, since the president has no power in reality.  The same thing would have occured with any other president. The current real estate market in Tehran is a huge paradox. Government workers making $300 a month will never be able to buy even 30 square meter apartment in a crap neighbourhood. If you don’t own your place, you’re going to face the rent market. Iran might be very strict when it comes to freedom of speech, but the real estate market is ultra-free-capitalistic.

The article in DN did not surprise me. The Real Estate brokers over here has denied a housing bubble for a quite a while now. Who can blame them, a strong real estate market benefits their salaries.

I’ve heard it from many, not only brokers that Sweden’s real estate market is immune, why is Sweden an exception?

The UK housing market is going bust along with US. 30%+ return on apartments for half a decade makes no sense, when the population growth is 0.157% ( 2008 est ) and income growth is around 3% annually.

If you’re trying to profit from the real estate market as a private buyer, you should definetely NOT invest in western markets, period.

According to DN all the problems are handled with collective solutions. Like any other form of collectivism it leds to nobody really caring for the greater good.

On a more happier note, armageddon is baked in to Pfizer’s stock price. Let’s see how long it will be pushed down by collectivism after the democrats win.

I read today in an article in DN that Condolezza Rice wants countries to write down Iraq’s debt. That’s funny since the US economy is turning into a third world economy, the all mighty dollar is becoming more and more worthless as we speak.

Public debt as of 29 May, 2008!

P.S I’m slightly biased because of my gold/silver investments, so don’t take my “down with $” too seriously!