Crimean Crimes?

Why do we care about the Crimea?

Like many people, I grew up with a vague sense that the Crimea was an obscure piece of land somewhere in eastern Europe, and that is was most famous for being the occasion for the “Charge of the Light Brigade” that Tennyson immortalized in his poem. The point of the poem, as I recall, was that hundreds of lives were wasted in a dramatic military action because “someone had blundered.”

Now it looks like a repeat is taking form. The Ukrainians ousted their President, who was sympathetic to the Kremlin, and the ethnic Russians in the Crimea rebelled against the new Ukrainian government. Russia wants to secure its naval base in the Crimean port-city of Sevastopol. Russia is staging military exercises on Ukraine’s border, and there is talk that the US and other countries may apply some kind of economic sanctions to Russia.

Global markets have been roiled, first down, then up, then mixed. Russian markets have traded down dramatically. I feel vaguely unpatriotic for thinking about investing in Russian stocks like Lukoil or Gazprom because they’re so cheap—price-earnings ratios less than half that of the rest of the world.

The first Crimean War began in 1853 and was the result of slow-motion blundering by inept statesmen and their leaders’ search for prestige and strategic advantage. It didn’t have much impact on the US—we were preoccupied with our own inept blundering in the run-up to the Civil War. It resulted in over half a million casualties. The only bright spot was that it forced Russia to sell Alaska to the US to help pay off its war debt.

Most Americans are skeptical of a new conflict in an obscure location fought for vague, strategic goals Twain famously quipped, “History doesn’t repeat itself, but it does rhyme.” Let’s hope it doesn’t rhyme this time.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2014-03-05T11:36:07+00:00 March 5th, 2014|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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