Smarter Money: Speculation on the Eastern Front

JJC doesn't usually tip on specs, but the Third Millennium Russia fund is up 54% year to date.
By Jim Cramer ,

From time to time people ask me what I think would be an interesting speculation. I hardly ever answer, because what happens is that I will mention something and it will get translated into the person's entire portfolio. I will then see that person a couple of years later, long after I would have taken the gain on the spec -- if there was one -- and the tippee will want to throw rotten tomatoes at me for the idea.

With that preamble, let me tell you that if I want to speculate, I do it where I can hit a home run or expect to strike out, something that I truly take a flyer on, a limited dollar amount flyer.

Like the

(TMRFX)

Third Millennium Russia Fund.

I know, Russia, what a disaster. People are never going to forget 1998, which virtually wiped out Russia. You know there will never be another dime made in Russia.

Or will there? This no-load fund is up 54% year-to-date, which makes it one of the strongest funds in the universe. It is up 130% since its inception in Oct. 1, 1998,

after

the fiasco. It owns oils and cash and is waiting for a pullback to deploy that cash. The fund invests only in audited companies that have low multiples. (It blew out of telecom when the blowing out was good.)

Why Russia? First, let's say that, despite the best efforts of the press to minimize the breakthrough,

President Bush

truly has connected with Vlad Putin. Second, let's say Putin really wants Russia to become part of Europe, to be a normal country. Third, Russia has a large export surplus and a government surplus. Its central bank has been building reserves. Inflation, while still not good, is much better than it used to be. Putin has instigated tax reform so the rates are now low. The devalued ruble gave lots of Russian companies a leg up against other European companies.

Further, my chief fixation in life other than my wife, kids and the stock market, is the Ost Front, the Eastern Front and how the Russians beat the Nazis. In fact, much to my wife's chagrin, unless I was on vacation, I haven't read a book that wasn't about the conflict in the last decade. I know, it is a total obsession.

Anyone who has spent a lot of time studying Russia knows that there is an indomitable spirit to the Russian people that has withstood a lot more than the current pain that its society is currently undergoing. The manufacturing might and the hard work of the people can never be underestimated and the bravery, at times, of their leaders can't be overlooked. During the Cold War, I hated them like everyone else and I cheered when Reagan called them the Evil Empire. They represented all that was wrong in the world under Communism. But the Cold War is over. If you take Putin at face value and you view the Russian people in the context of those who beat Hitler, not the context of those who drink too much vodka and stay in lines all day, you might have a nifty investment.

Don't worry, you haven't missed anything yet in Russia. Despite its rally off the bottom, the entire market capitalization is only a fifth of the value of

Exxon-Mobil

.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to

jjcletters@thestreet.com.

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