Yevhen Pentsak's advice: Gambling on dollar – 1:0 in favor of the National Bank

Yevhen Pentsak (50) 19 August'09

Tags: Yevhen Pentsak, investment portfolio, exchange rate, crysis, NBU

Headlines of the week: world stock markets storming, are we there or somewhere in the middle, agiotage in Ukrainian currency market of, enough of scope for the stock market in Ukraine.

Pronouncements made on early end of crisis turned to be a bit too previous. Monday, Aug the 17th stock indices demonstrated a record plunge (2-3%). First signs of rally in the realty markets were brought to naught by unemployment rate growth. Raw material stocks fluctuate. World economy seems to be convulsed. Will the patient survive? We need Dr. House’s attendance for that, badly. He himself is high on painkillers and needs a fix, anyway. Another billion to go so as to deaden the pain will do nicely for him? And we’re on the way then, “going full steam ahead”. The destination is not certain, yet. What are we going to lose? Should we elect to stay in cash, inflation is going to eat up the profit in the long-term perspective? Having purchased land plots? There isn’t much market for it in the long run. Land always rests in resource-limited setting and human life, too. Which is right - a life for the resource or vice versa? Considering purchase of the whole stock of realty? Who’s going to pay? What’s to be in the bottom-line? Oh, yes all of us need a bite to eat at times, right? “Panem et circenses!” as old Romans said. We are sure to have the circuses in a while for the election campaign is coming soon! The bread remains firmly in the issue. And mind, the gasoline, too. They are the two things that are supposed to rule the world, shortly. No one can do without them.

This way of thinking is inherent in the many, now. Now we’ve got oil, and bread is the only resource left we don’t have enough of, so far. Europe’s weak, okay, and America has a bigger (than Ukraine) fish to fry. Here we go! There in the enemy camp they can’t split it between them. Tender shots of gradual growth are visible? Autumn will come so shortly, anyway. And the winter will follow no doubt! There’s no point in painkillers in winter, we need heating then. So, it may well happen that it’s too late for aspirin and call me in the morning when you call it a day…

The Prime Minister, Yulia Timoshenko, is insisting that the Nat Bank should have the hryvnia rate stabilized, as a matter of urgency: “Today, we do not have any preconditions for national currency rate fluctuations. Any and all economic index-numbers supply evidence enough in favor of hryvnia’s stabilization. The things happening in the National Bank that are related to national currency devaluation can’t be explained in terms of economic reasons or by crisis environment…” I don’t think we have any of preconditions, either. Though, many politicians would be bored, if things had developed otherwise.

We still keep holding to portfolio mix of

  • 35% - UAH,
  • 30% - dollar,
  • 30% - euro,
  • 5% - gold (bar and paper).

Hopefully, NBU will fix it up with the Premier, dollar will decline, and at that very instance we will fix the portfolio giving preference to hard currency. In the meantime do have a closer look at Ukrainian metallurgy and chemistry stocks.

As John von Nepman and Oscar Morgenstern wrote: “The point in risk aversion is in our acceptance of other people’s decisions. The latter are usually capable of encouraging other people to take decisions in their turn which results may eventually be unfavorable to us”. One can never replay life as if it were a recording, hey?

Let’s be helpful, then, in finding winning relationships!

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See also:

Мысли среди недели: индуктивные и дедуктивные методы исследования фондовых рынков

Очень часто мне приходится дискутировать о применимости тех или иных финансовых теорий к текущему анализу рынков, осуществление на его основе прогнозов и инвестиционных решений. Еще чаще мне приходилось наблюдать за спорами теоретиков и практиков на финансовом фундаменте. Меня всегда удивляло, почему они спорят? Ученые и исследователи используют общепринятые модели, описанные во всех классических учебниках, их знает каждый магистр по финансам. Почему выводы этих моделей не нравятся практикам?

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