COVER STORY
or another type of investment is written down to zero – as is the case with Russia – this often means refraining from selling out when the price of an asset crashes . Yet many retail investors extrapolate this advice , taking it to mean you should automatically buy in when the screen turns red , which is an oversimplification . While Allen says the best returns can often be obtained by investing when the market is down , this is only the case if you have carried out thorough due diligence beforehand , and decided that its correction is unwarranted .
All bets are off Parker says it would be difficult to see how anyone could have come to that conclusion on Russia after its mini-pullback at the end of January . “ Russia is an example of a situation where the idiosyncratic risk is so great that there is no particular reason to believe it is a good investment just because it is a lot cheaper than it was three months ago ,” he adds .
Art for art ’ s sake
The most shocking investment de Lisle can remember was the British Rail Pension Fund ’ s decision to move 3 % of its assets into art in 1974 .
“ It had great timing because of the inflationary environment , but was a very poor investment because of costs , liquidity and changes in taste ,” he says .
“ This was proved by the 11 % annualised return the fund made on it , which was inferior to other available investments in real assets , by the 12 years of selling it took to disentangle itself , and the fact that the impressionist paintings accounted for nearly all the profits , while the vast majority went nowhere .”
“ Russia began to be seen as a good investment in the late 2000s at a time when Putin was liberalising his economy and benefiting from a rising oil price . However , those days are gone . The future has changed for Russia for a generation and until a new regime is in place . In this context , the price you pay for the
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