Everyone around me made 60% returns. I made zero and I'm glad
Everyone around me made 60% returns. I made zero and I'm glad
December 2024. The dollar is at 103 rubles. Everyone around me: "Bro, convert everything to rubles, park it in a deposit at 21%, take it back out in dollars later. It's free money."
I didn't convert.
A year passed. Bloomberg writes: the ruble strengthened 45%, its best result since 1994. The dollar is now 78. Add a ~15% deposit on top. Whoever went into rubles in January made ~60% in dollar terms. In dollars themselves: 5%.
I left 55 percentage points on the table.
But!
While the ruble was strengthening, something interesting was actually happening: - The National Welfare Fund shrank 3.2x, from $113.5 billion to $35.7 billion. - Oil and gas revenues fell 22%. Urals trades at $35 against the $70 the budget was planned on. - The budget deficit grew 5x.
And the ruble is... strengthening? Why?
So I started digging. Exchange trading in dollars has been halted since June 2024: the Central Bank sets the rate. Exporters must sell 80% of their foreign revenue. More than half of imports are now paid for in rubles. Sanctions cut off the demand for dollars.
Which means this isn't the economy getting stronger. It's a currency shortage inside a closed system.
Then I remembered the history. 1998, I'm one year old: the ruble loses 70% in half a year, 84% inflation, default. 2022, I'm twenty-five: the first default on foreign debt in 100 years, the rate at 142. Twice in my lifetime the ruble has gone through a complete clusterfuck, and holders lost a serious chunk of their savings.
Plus the personal part: all of my income is in rubles. Keeping my savings there too means one shock takes out both the income and the capital. And I don't plan to spend my whole life in Russia. At the very least I want to chill through retirement in Italy (that's what I tell myself).
Bottom line: I missed out on 55%. But I understood something: savings are not about maximizing returns. They're about not losing everything in one day. Taleb wrote about this in Antifragile:
"In a strategy that entails ruin, benefits never offset risks of ruin"
P.S. This is not financial advice. Your risk profile, planning horizon and all the rest are definitely different from mine. Please don't do what I did.
Stay tuned 🥷🥷🥷