Retail investors in Russia can be divided into "Slavophiles" and "Westerners". The first prefer domestic securities, the second attract foreign assets, mainly U.S. stocks. It will be useful for newcomers to the market to know, how fundamentally different are these two markets.
The best "chips"
For those, who makes the first purchases on the market, it is very important not to make a mistake. Negative experiences, associated with the loss of money, usually, for many years discourages any desire to invest. In order not to repeat other people's mistakes, it is worth starting with the best promotions.
Term "Blue chips" did not appear by chance. It's the elite of the stock market in every sense.. Such companies are included in large indices, which means, they have been held and bought by institutional investors for years.: pension and sovereign funds, Insurance companies, banks.
But even of the "blue chips" not everyone can fit a beginner.. For example, berkshire Hathaway financial company of the legendary Buffett - the seventh largest in the United States, and it is included in the key indices. But in terms of the volume of transactions does not even fall into the top 500, and in Russia on the St. Petersburg Stock Exchange is at the end of the first hundred.
From the example of Berkshire Hathaway follows the first and most important criterion of choice - liquidity. Not the size of the company, namely the liquidity of its shares, that is, the volume of trading with securities. This criterion is good topics, which allows you to compare shares from different countries.
In the Russian market, all the "blue chips" fit into the list of 44 companies, which form the indices of Mosbirzhi and RTS. Again, not all of them are suitable for a beginner.. There are top 6, who lead by a wide margin from the rest. These are companies with a trading volume of 1 trillion rubles per year: SberBank, Gazprom, Norilsk Nickel,LUKOIL, Rosneft and Yandex.
It's the heavyweights., which hold the entire Russian market. They account for 60% major indices, their stocks dominate all portfolios in the world, who invest in Russia. You can say, what if the investor is in principle ready to invest in the Russian market, then we need to start with these actions..
What is America's strength??
The difference is in scale. If there are only six shares in Russia, which, without significant reservations, may be of interest to any investor, then in the USA companies, similar in trading volume (from 1 trillion rubles per year, or from 1 billion dollars per month), more 100 things. And almost all of them are traded in Russia., that is, available to an unqualified investor.
The US market is a kind of supermarket for the investor, where there is everything and in large quantities. For a beginner, this is a plus., and minus. On the one side, you can build a portfolio with any set of ideas and industries, for any purpose and for any period. But, On the other hand, choosing from a hundred companies is much harder to choose from, than six. Therefore, in terms of liquidity, the choice is not obvious.: there are worthy papers in Russia, and in the USA.
Where there is less risk: in Russia or America?
The second most important criterion is volatility.. That is, the degree of deviation of stocks from the main trend. Volatility is extremely important for a beginner, because experience shows: all people greatly underestimate their risk appetite. At the first strong fall, many investors, and not only beginners, sell their shares at a loss.
To protect against such a scenario, it is better to start with promotions, which have minimal historical volatility. They will decline less on the market correction and react weaker to the negative in the news.. That is, it will be more comfortable to invest in them..
In the Russian market, the most liquid top 6 "chips" are also one of the least volatile. On average, stocks fluctuate 15-20% weaker., than the stock index as a whole. The only exception is "Yandex", whose papers "walk" on 30% stronger than average, and it's worth keeping in mind.
In the U.S., among the most liquid stocks are, which fluctuate twice, three or even four times weaker than the market. For example, it's Walmart, Merck and NextEra Energy. In the Russian market, such a rare combination of liquidity and low risk will not be found. And this is a plus in the piggy bank of American stocks..
Protection against devaluation
Another big criterion is related to the topic, that stocks should perform better, than foreign currency. Otherwise, investments lose their meaning.: keeping cash dollars under the pillow becomes more profitable and easier. With 2014 of the year, when the Russian currency was untied from the target "corridor" of the Central Bank, the ruble depreciated by half (against the United States dollar), losing an average of 10% in year.
In this regard, any liquid and high-quality shares behave approximately the same way.: they are steadily apersonal over the cash dollar, that is, they show the yield in rubles, exceeding these 10%. But the question remains.: which still exceed better - Russian or American?
Calculations show, that conditional portfolio of top 6 Russian stocks, in which there would be equal to everyone from "Gazprom" to "Yandex" (on 16,7% for each company), over the past seven years has grown in 3,6 Times, that is, brought about 20% annually in rubles and 10% in dollars.
Similar calculations for 100 the most liquid U.S. stocks, traded in Russia, Show, that such a portfolio in the same seven years has grown in 2,2 Times, showing an increase in dollars on average by 12%, in rubles — on 22% annually. Certainly, not a fact, that in the future the positive dynamics of the market will be as strong, but obviously, that U.S. stocks protect against ruble depreciation on average better, than Russian.
For a beginner investor, which faces a choice: Russia or USA, - The answer lies on the surface. The American market gives a wider selection of quality securities, including those with a low risk index (volatility). And it better protects against the devaluation of the ruble..
Main and, in fact, the only argument in favor of Russian securities is the simplicity of choice. Only 5-6 "chips" of high liquidity, which grow faster than the market and behave restrained in the fall of the market. If you try to pay attention to the smaller and liquid shares of Russia, then almost every one of them will have more interesting analogues overseas..