Yevhen Pentsak's advice: gambling on dollar – 2:0 in favor of the National Bank

Yevhen Pentsak (50) 25 August'09

Tags: NBU, exchange rate, fund market, budgeting, Yevhen Pentsak

Headlines of the week: Hryvnia downtrend steadied at 10 kopeks’ week-on -week mark-down, world stocks has yet felt the spanking breeze of growth, Ukrainian stock market celebrates “independence” from Russian and American markets demonstrating growth even on negative news

Independence Day celebrations in Ukraine call up the subject of “victorious advance on the track of prosperity”! We are really proud of our country where we can express ourselves freely, as well as can pursue our wills and thrive on the things we like; where there is plenty opportunity for fostering entrerepreneurial ability as opposed to its total absence in the times of Soviet decay. We travel across the world to learn other cultures and gains of other nations. What’s next? Transfer from 10-year towards 11-and-12-year schools, and stuffing the schedules with unnecessary subjects, new “American” teaching techniques which are alien to local customs and traditions? Our health care system has left hospitals short of medicine, bedclothes and provisions; it has supplied third-rate prophylactic vaccines causing child deaths instead and caused growing sentiments against home doctors prescribing sky-high value medicine and antibiotics as the only panacea for any disease. Roads covered with dents, burdened with silly restrictions and suburban shared taxis constantly packed with passengers standing bent-down. Arts are being flourishing? Sports being at their best? How about ecology and environment preservation? Has corruption been combated or defense capability properly maintained? Do pension plans insure decent living standards for the elderly? Sad to say but that is about it. We might come back to creating our state anew at this point…crisis is the best time to reconceive the ways state politics is fulfilled. Do we really “need that thunder” to find ourselves next door to default so as the authorities might “cross themselves and wonder” and eventually start caring about the country?

There’s criticism galore on the government decision to associate IMF professionals into drawing up the 2010 budget. No other way it could be done, for sure. Whoever can make it deficit-free for us? At least there will be that somebody to be put in the wrong, whereas we’ll stand aside watching, having nothing to do with it. It might be a wise thing to do, in fact, to put the matter into professional hands. As far as grab-what-you-can post privatization’s concerned... What’s it to us? The most precious thing in governing our state is that there’s always an opportunities for state property carve-up (done fully “legitimately”). What would be the point in state power, if it were not for the latter?

The National Bank rows over dollar: hryvnia decline steadied at 10 kopeks’ week-on -week mark-down. Having the dynamics handy it is easy to figure out where we will end up by the end of the year. It’s essential indeed, to have things well sorted out and predictable, right?..

There are three issues that blow minds of investors’ community at the moment and they are as follows:

1. When does the world recession end?

2. Which way and due to what means is the world economy supposed to recover?

3. Are there standing risks of a new crisis (a relapse into a new one)?

Nuriel Rubiny contends that collapse of euro zone economies as well as the economy in US will be stopped by the 4-th quarter of 2009 and they’ll start gaining momentum early in 2010. There are sure signs of recovery in China, India and Brazil. As to the question #2, the actual form of the recovery is just being discussed.

Still, dollar standing remains precarious and more and more voices are heard in favor of difficult times for it still to come, and there’s no smoke without fire, of course! Quite a number of my acquaintances turned to converting dollar assets into euro of late. Once NBU gets impelled to bring substantial sums into the interbank at the rate of 7,8 – 8/$, my strong recommendations will be to have the portfolio restructured as follows:

  • 10% - UAH,
  • 30% - dollar,
  • 55% - euro,
  • 5% - gold (bar and paper).

Ukrainian stock market will definitely keep growing, in my strong opinion. “Staying in cash” will be quite a dangerous thing to do soon, so some substantial investments should be considered like realty or stock market. It would not come amiss to have a closer look at “Finart The 1st” interval fund. It has just been registered and the investment certificates of the fund can be bought at face value (Hr1.000.00).

There’s detailed info on the fund’s characteristics and sales conditions at:

Behavioral financial ideas do capture the headlines and The Economist’s fresh look on the subject might be quite interesting: The Economist




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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