Should I get rid of my Russian stocks?

Size of international stock markets

I think there’s this common misconception that the US and Russia are balanced economic superpowers on opposite sides of the globe. But the reality is, Russia’s economy, at least as measured by their stock market, is absolutely dwarfed by the US. This chart shows the weightings of global stocks held by Vanguard’s Total World Stock Index Fund, VTWAX. It buys stocks around the world in proportion to their value. As you can see, the value of companies in the US is about 180X larger than those in Russia.

Russia is actually considered an “emerging market” based on factors such as per capita income, exports of diversified goods and services, and integration into the global financial system. Even among just emerging market countries, Russia only makes up 2.9%. China is the largest at 34.2%.

Are YOU currently invested in Russia? Well, you might be. If you own a global, international, or emerging market index or mutual fund, a tiny share of that is likely in Russian stocks. Should you do something about that? Probably not. I mean, for starters, Russia’s stock market hasn’t even been trading for the last few days. They shut it down because it’s in such free fall. Even if it did open, it would be logistically very difficult, likely have tax implications, and wouldn’t make much difference to you or Russia. Active traders will near instantly push the price down to where it should be to price in the war.

Anyway, nothing to do with this information other than speculate as to what Putin is overcompensating for. Stay the course.

As always, reminding you to build wealth by following the two PFC rules: 1.) Don’t invade sovereign democratic nations and 2.) Don’t succumb to hateful propaganda.

-Jeremy

Chart source: Vanguard Total World Stock Index Fund (VTWAX) holdings

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