Chapter Eleven

The Big Picture and the Small Picture

A Case Study of Russia

Often the big picture contradicts the small picture.

I can still recall that when I traveled to Russia looking for investments in the early 1990s, the big picture was that the place was dirty, low-down, and dishonest. But the small picture presented isolated pockets of real opportunity. We’re talking macro versus micro views here. Although Russia’s political, economic, social, and financial situations all left a lot to be desired, there were still bargains to be found.

By correcting the gap between the macro and micro views, you can get a jump ahead of the crowd.

And by correcting the gap between the macro and micro views, you can get a jump ahead of the crowd.

The Bad and the Good

When we first began tentatively sniffing around Russia, the macro picture could not have been more bearish, unless a full-fledged civil war had broken out.

  • A besieged Boris Yeltsin had barely staved off a countercoup by shelling the parliament.
  • The place was a hotbed of hard-core Communist resistance.
  • Inflation was skyrocketing.
  • Industrial output had hit rock bottom.
  • Capital flight was endemic. Any Russian with a few rubles to his or her name had smuggled the money out of the country and shoved it in some offshore safe haven far removed from the long arm of the Moscow tax collector.
  • There were no well-organized stock exchanges.
  • There were no balance sheets.
  • There were no earnings reports, because there were no earnings.

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