Turkey/Turkish Stocks down 32% - approaching 2008 levels

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BuyAndHoldOn
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Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by BuyAndHoldOn » Tue Jul 24, 2018 11:11 am

Is this a good time to buy? ==> What does Turkey do for the world, anyway? Seems like they are awfully dependent on foreign capital coming into their markets.

(Don't worry, this is more for discussion than serious consideration).

https://www.ishares.com/us/products/239 ... turkey-etf#/
https://finance.yahoo.com/quote/tur?ltr=1

https://www.starcapital.de/en/research/ ... valuation/

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nedsaid
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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by nedsaid » Tue Jul 24, 2018 11:13 am

One reason that Emerging Markets sometimes get the nickname "Submerging Markets." There are risks out there and they can be big. Turkey is a good example of political risk.
A fool and his money are good for business.

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BuyAndHoldOn
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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by BuyAndHoldOn » Tue Jul 24, 2018 11:26 am

nedsaid wrote:
Tue Jul 24, 2018 11:13 am
One reason that Emerging Markets sometimes get the nickname "Submerging Markets." There are risks out there and they can be big. Turkey is a good example of political risk.
....implying that buying Turkish stocks is - to a large degree - betting on regime change?

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by grok87 » Tue Jul 24, 2018 11:28 am

Wait 6 months till they are out of the news
Keep calm and Boglehead on. KCBO.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Valuethinker » Tue Jul 24, 2018 11:50 am

BuyAndHoldOn wrote:
Tue Jul 24, 2018 11:11 am
Is this a good time to buy? ==> What does Turkey do for the world, anyway? Seems like they are awfully dependent on foreign capital coming into their markets.

(Don't worry, this is more for discussion than serious consideration).

https://www.ishares.com/us/products/239 ... turkey-etf#/
https://finance.yahoo.com/quote/tur?ltr=1

https://www.starcapital.de/en/research/ ... valuation/
Just because something goes down a lot does not mean that it cannot go down more. Catch the falling knife.

The stocks may be cheap. However given Turkey has 30%+ inflation (from memory) the accounting numbers will be highly distorted.

The usual way these meltdowns proceed (Argentina 2002 etc.) is you discover that companies and households have borrowed in a foreign currency. Thus, the devaluation puts them under financial stress. That stress, on a macro level, causes interest rate rises (to support the currency) which makes the stress worse and/or bankruptcies and further distress which leads to further devaluations which leads to more distress .... downward spiral. Capital flight, plunging currency, soaring domestic interest rates, foreign exchange reserves depleted.

Eventually the IMF gets called in. Exchange controls are imposed as well as savage budget cuts (further causing distress). Defaults spike and the economy has a savage recession.

There's a moment to buy these things, but 35% down, unless the rot is stopped by strong government action (India when Rajan was governor of the Bank of India) is usually not where it stops. 80% down more like. Think Mexico in 1994. Asia in 1997-98. Argentina in 2002. etc.

BTW recovery is not usually super swift, after the initial bounce. One has time to consider.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Always passive » Tue Jul 24, 2018 12:04 pm

I suggest you take the time to read about Turkey before getting to excited.
If you follow the news, Turkey is in severe economic chaos (do not want to get into political issues since it is not allowed in this forum). The economic chaos has forced the currency to fall dramatically relative to the dollar and significant amount of business loans are in dollars.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by asif408 » Tue Jul 24, 2018 12:08 pm

I agree with ValueThinker. Buying low is generally a good thing but not necessarily at the individual stock or individual country level. If you have the gambling urge then throw a small portion into it as long as it's money you don't mind losing. Remember that stock markets of individual countries have gone to zero before (e.g., Russia, China).

Russia and Brazil fell 80% from their 2007 highs and hit their lows in 2016. Turkey's last high was 2010, so if it is anything like those two countries and it does begin to recover, it may still have a ways to fall.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Pajamas » Tue Jul 24, 2018 12:20 pm

Rich people are fleeing Turkey almost as fast as they are from Venezuela. It's much too early to try to speculate on upside in their economy as the situation is more likely to continue to deteriorate rather than stabilize and improve in the near term.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by david1082b » Tue Jul 24, 2018 12:31 pm

One day there will be an iShares ETF for every nation I suppose, but in the meantime people can just get Total World Stock or ACWI.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by jhfenton » Tue Jul 24, 2018 1:04 pm

BuyAndHoldOn wrote:
Tue Jul 24, 2018 11:11 am
Turkey/Turkish Stocks down 32% - approaching 2008 levels
For the record, the title is not accurate. Well, the down 32% this year part is, but the approaching 2008 levels is not true in any sense that I can think of.

TUR, the iShares Turkey ETF, dropped 65% from August 1, 2008 through late November 2008, bounced a bit and then hit 65% down again in March 2009.

Compared to August 1, 2008, TUR is currently down 38%. TUR would have to drop another 45% to hit the 2008 low.

From its May 2013 high, TUR is currently down 57%. Bad, but also not quite 65%.

I'm a sucker for distressed assets, but I wouldn't touch Turkey with its political and economic instability right now.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by BuyAndHoldOn » Tue Jul 24, 2018 1:36 pm

jhfenton wrote:
Tue Jul 24, 2018 1:04 pm
BuyAndHoldOn wrote:
Tue Jul 24, 2018 11:11 am
Turkey/Turkish Stocks down 32% - approaching 2008 levels
For the record, the title is not accurate. Well, the down 32% this year part is, but the approaching 2008 levels is not true in any sense that I can think of.

TUR, the iShares Turkey ETF, dropped 65% from August 1, 2008 through late November 2008, bounced a bit and then hit 65% down again in March 2009.

Compared to August 1, 2008, TUR is currently down 38%. TUR would have to drop another 45% to hit the 2008 low.

From its May 2013 high, TUR is currently down 57%. Bad, but also not quite 65%.

I'm a sucker for distressed assets, but I wouldn't touch Turkey with its political and economic instability right now.
I agree with your point(s) but respectfully disagree with the semantics. TUR dropped from ~$55 in Summer 2008 to between $19-28 for the fall/winter of that year. TUR currently trades under $27. ==> we might have further [down] to go, but these are 2008 levels.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by jhfenton » Tue Jul 24, 2018 1:44 pm

BuyAndHoldOn wrote:
Tue Jul 24, 2018 1:36 pm
I agree with your point(s) but respectfully disagree with the semantics. TUR dropped from ~$55 in Summer 2008 to between $19-28 for the fall/winter of that year. TUR currently trades under $27. ==> we might have further [down] to go, but these are 2008 levels.
Fair enough. I was considering reinvested dividends, and I was looking at the bottom, not "sometime in 2008" levels. :beer

I still wouldn't touch Turkey with HWSNBN running things.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by fennewaldaj » Tue Jul 24, 2018 10:07 pm

OP if you like investing in beaten down cheap countries the etf cambria global value may be of interest to you (GVAL). I has a fairly big turkey stake. Schwab fundamental emerging markets also over weights Turkey but it is still a tiny weight.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Valuethinker » Wed Jul 25, 2018 7:51 am

Always passive wrote:
Tue Jul 24, 2018 12:04 pm
I suggest you take the time to read about Turkey before getting to excited.
If you follow the news, Turkey is in severe economic chaos (do not want to get into political issues since it is not allowed in this forum). The economic chaos has forced the currency to fall dramatically relative to the dollar and significant amount of business loans are in dollars.
And so the setting is made for a devaluation-debt-default spiral.

It will take a while to sort out such a mess.

Without discussing politics, we can observe that Turkey has a major civil war going on in its neighbour, and has actively sent troops into that neighbour to attack rebels. So along with Jordan (and Lebanon) it's an obvious candidate for destabilization if the conflict spreads (one would have to mention Iraq too in this regard as a nation where both the Sunni and Shia factions are represented).

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Valuethinker » Wed Jul 25, 2018 7:51 am

fennewaldaj wrote:
Tue Jul 24, 2018 10:07 pm
OP if you like investing in beaten down cheap countries the etf cambria global value may be of interest to you (GVAL). I has a fairly big turkey stake. Schwab fundamental emerging markets also over weights Turkey but it is still a tiny weight.
This is surely the way to play these things. Cheap is nice but the actual amount of "cheapness" is very hard to determine.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Blueskies123 » Wed Jul 25, 2018 8:15 am

I have been to Turkey a number of time on business a decade ago. I have also been to Brazil and many other countries and see similarities. I met so many people in Turkey that made be believe they have potential because of of their location between Europe and Asia and the potential of becoming a full and active NATO member. Unfortunately they need a pro business, low corruption government. Under the current situation I would not look at them until they were down 80% and look some more at 90% but realize it could go to zero.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by BuyAndHoldOn » Wed Jul 25, 2018 11:07 am

fennewaldaj wrote:
Tue Jul 24, 2018 10:07 pm
OP if you like investing in beaten down cheap countries the etf cambria global value may be of interest to you (GVAL). I has a fairly big turkey stake. Schwab fundamental emerging markets also over weights Turkey but it is still a tiny weight.

Excellent suggestion.

In an ironic twist, perhaps: I have stayed away from GVAL because I question the "value" (pun intended) of re-balancing into the cheapest global equities each year. Seems to have the potential to catch falling knives/sell out of things that are finally recovering.

...although, GVAL actually has performed better since its inception than IXUS/VXUS (Total International ETFs). Was surprised to see that.
Test it for yourself: https://www.portfoliovisualizer.com/backtest-portfolio
Last edited by BuyAndHoldOn on Wed Jul 25, 2018 11:52 am, edited 2 times in total.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Valuethinker » Wed Jul 25, 2018 11:22 am

Blueskies123 wrote:
Wed Jul 25, 2018 8:15 am
I have been to Turkey a number of time on business a decade ago. I have also been to Brazil and many other countries and see similarities. I met so many people in Turkey that made be believe they have potential because of of their location between Europe and Asia and the potential of becoming a full and active NATO member. Unfortunately they need a pro business, low corruption government. Under the current situation I would not look at them until they were down 80% and look some more at 90% but realize it could go to zero.
Hi

I believe Turkey is a full and active NATO member? German anti aircraft missile batteries, for example, were stationed in Turkey until quite recently. There are joint military exercises. That's more than France's participation, say.

https://en.wikipedia.org/wiki/Member_states_of_NATO since 1952?

Perhaps you mean member of the European Union? I think it is a purely factual observation that progress in that direction is stalled. It is unlikely to progress for the foreseeable future -- that was made clear in various recent national elections in Europe where the issue was alluded to.

The Turkish business people I have met are pragmatic, intelligent and globally oriented. Turkish engineers, accountants and software people tend to be of high quality. Women are well represented among the professions-- a sign of mobilization of resources. The government is certainly pro business and no more corrupt than previous administrations. In marked contrast to Brasil (or South Africa), ordinary crime is not a major issue.

The economic position is, however, difficult. The Current Account deficit is large relative to GDP -- the country was functioning by attracting foreign capital -- history shows that causes problem if sentiments turn. Consumer debts had risen by a lot. Inflation is high. The Syrian situation is destabilizing.

The government has reacted to currency weakness by accusing speculators and the unpatriotic of destabilizing the country. That's not a good sign when governments do that - means they will not act to resolve the economic problems they can address. Makes the inevitable adjustments all the harder.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Imbros » Wed Jul 25, 2018 12:27 pm

Pajamas wrote:
Tue Jul 24, 2018 12:20 pm
Rich people are fleeing Turkey almost as fast as they are from Venezuela. It's much too early to try to speculate on upside in their economy as the situation is more likely to continue to deteriorate rather than stabilize and improve in the near term.
Correct. This is the best observation and forecast here.

Turkish economy and Turkey as a whole has changed a lot since 2008, and not necessarily in a good way. 2008 was nothing compared to what is happening now. I would short Turkey, but as a principal I don't do any shorting.
There is no greatness where there is no simplicity, goodness and truth. -L. Tolstoy

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by whodidntante » Wed Jul 25, 2018 12:37 pm

Imbros wrote:
Wed Jul 25, 2018 12:27 pm
Pajamas wrote:
Tue Jul 24, 2018 12:20 pm
Rich people are fleeing Turkey almost as fast as they are from Venezuela. It's much too early to try to speculate on upside in their economy as the situation is more likely to continue to deteriorate rather than stabilize and improve in the near term.
Correct. This is the best observation and forecast here.

Turkish economy and Turkey as a whole has changed a lot since 2008, and not necessarily in a good way. 2008 was nothing compared to what is happening now. I would short Turkey, but as a principal I don't do any shorting.
I don't know any investment that is cheap and looks really awesome. That's kind of how global value investing works, you buy when everyone else is packing up.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by hesson11 » Wed Jul 25, 2018 7:28 pm

Too risky for me, unless we're talking about taffy.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by acegolfer » Thu Jul 26, 2018 6:52 am

BH in another thread says MPT should work in all countries. So the implication is ppl in Turkey should buy and hold Turkey index fund. serious question to BH.

Q: Suppose you are a Turkish. Will you buy and hold Turkey index fund?

edited
Last edited by acegolfer on Thu Jul 26, 2018 8:06 am, edited 1 time in total.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Valuethinker » Thu Jul 26, 2018 7:22 am

acegolfer wrote:
Thu Jul 26, 2018 6:52 am
BH in another thread says MPT works in all countries. So the implication is ppl in Turkey should buy and hold Turkey index fund. serious question to BH.

Q: Suppose you are a Turkish. Will you buy and hold Turkey index fund?
You cannot impute a consensus from the 2 other posters on that thread, one of whom is me. In that thread, you state an assertion as if it is a truth.

To reiterate what I said there:

No. Because the Turkish index is insufficiently diversified. Also Turkish government debt is not default risk free.

In a large index like the UK, the MPT holds, but there are still significant gains to global diversification. That's not true in smaller markets.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by asif408 » Thu Jul 26, 2018 8:00 am

acegolfer wrote:
Thu Jul 26, 2018 6:52 am
BH in another thread says MPT works in all countries. So the implication is ppl in Turkey should buy and hold Turkey index fund. serious question to BH.

Q: Suppose you are a Turkish. Will you buy and hold Turkey index fund?
Great question. Whether your name is John Bogle-san, Johannes Bogle, or Juan Bogle, the only answer that would work in all countries is to buy the world market cap. Therefore, you own some of your home country and other countries. It will likely not give you the best return, but it does eliminate the possibility of putting all your money in your home country and watching it disappear, as it has done in the past in China and Russia, to name a few. It basically protects you from an "extreme left tail risk" type situation.

As another poster mentioned, this would be very important in a country like Turkey, but I also don't see why the US or any other developed country couldn't be that way in the future.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by TareNeko » Thu Jul 26, 2018 10:22 am

I'm Turkish, though I live in America (~15 years) and also an American citizen. I have zero investments in Turkey (well, 0.2% of VEU is Turkey). My sister and parents still live there (in Istanbul), and they don't invest in the stock market. They do invest in real estate, which makes sense if you are living there. Population is growing, and due to terrible planning, all major businesses and markets (and jobs) are in Istanbul, so everybody wants to live there. These factors cause real estate prices to keep increasing. On top of that, a lot of foreigners (especially Arabs) are investing in real estate too. But due to exchange rate risk and overall decline of economy (and therefore weakening Turkish Lira), I'm better of keeping my money in US dollars and investing in US and international index funds.

At one point, just to make a comparison I researched this. I think it was from 2010 to 2016, where real estate prices in Istanbul tripled or so. Of course this doesn't take inflation into account, which I think is around 10-15%. During the same time period, Turkish Lira lost half of its value against US dollar. Also, during the same time period VTI roughly doubled.. Sure, you could rent the real estate but still, I don't see a reason to take risk where returns are questionable for someone living in US. Of course, if you are living there, due to massive inflation and demand on housing, you are better of buying and even investing in real-estate.
acegolfer wrote:
Thu Jul 26, 2018 6:52 am
BH in another thread says MPT should work in all countries. So the implication is ppl in Turkey should buy and hold Turkey index fund. serious question to BH.

Q: Suppose you are a Turkish. Will you buy and hold Turkey index fund?

edited

Valuethinker
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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Valuethinker » Thu Jul 26, 2018 10:22 am

asif408 wrote:
Thu Jul 26, 2018 8:00 am
acegolfer wrote:
Thu Jul 26, 2018 6:52 am
BH in another thread says MPT works in all countries. So the implication is ppl in Turkey should buy and hold Turkey index fund. serious question to BH.

Q: Suppose you are a Turkish. Will you buy and hold Turkey index fund?
Great question. Whether your name is John Bogle-san, Johannes Bogle, or Juan Bogle, the only answer that would work in all countries is to buy the world market cap. Therefore, you own some of your home country and other countries. It will likely not give you the best return, but it does eliminate the possibility of putting all your money in your home country and watching it disappear, as it has done in the past in China and Russia, to name a few. It basically protects you from an "extreme left tail risk" type situation.
Possibly it does not? In that countries slam on exchange controls and ask nasty questions about international assets. If you are a wealthy investor, you can afford the offshore trusts & Swiss bank accounts to protect your wealth. It gets a lot harder if you are a small investor. Wake up one morning, and your account with Vanguard (Ruritania) is frozen.

You might have international assets but they can freeze them or force you to redeem them. I think China is trying to get control of its citizens' investments abroad, as they fight exchange rate depreciation.

Venezuelans have Miami bank accounts. For all I know, they have accounts with Vanguard or Merrill Lynch in Miami.
As another poster mentioned, this would be very important in a country like Turkey, but I also don't see why the US or any other developed country couldn't be that way in the future.
If you really fear that kind of economic chaos, solution is not simple. Gold maybe or precious stones (watches?). Bank accounts held in foreign countries but FATCA will make it difficult for an American not resident in that country to open a bank account -- impossible, practically, unless you have enough money to interest a Swiss private bank, and even then they may refuse you because of the legal risk to them (if it turns out you were hiding income or assets from US government, they could be deemed to have "assisted" in that and pay large fines/ have execs be charged in US courts).

Probably if you are not resident in a country, it is now much harder to open up a bank account due to Money Laundering regulation and international agreements on tax evasion.

By international diversification a US-based investor can avoid a future Japan situation, to an extent. That's about it.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by arcticpineapplecorp. » Thu Jul 26, 2018 8:45 pm

Good news. You can own Turkey by owning the total international stock market index fund. 0.2% of this fund invests in Turkey. Good news is it's in proportion to how the world invests in Turkey. If you can't beat 'em, join 'em. See the market allocation (percentage ownership) in each country here (you'll have to click on "show more" to get Turkey to show up):

https://investor.vanguard.com/mutual-fu ... olio/vtiax
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by willthrill81 » Thu Jul 26, 2018 10:24 pm

If I was a betting man, I'd probably be shorting Turkish stocks right now.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by fennewaldaj » Thu Jul 26, 2018 11:03 pm

willthrill81 wrote:
Thu Jul 26, 2018 10:24 pm
If I was a betting man, I'd probably be shorting Turkish stocks right now.
Doesn't shorting a stock market when the value and growth numbers look so good have a ton of potential downside? Not that I am going to do either but I would be much more comfortable with a long term bet on the long side. I guess its possible that both view are right (that is it is a good short in the short term but also good for a long term by and hold position.
http://portfolios.morningstar.com/fund/ ... ture=en-US

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by willthrill81 » Fri Jul 27, 2018 12:42 am

fennewaldaj wrote:
Thu Jul 26, 2018 11:03 pm
willthrill81 wrote:
Thu Jul 26, 2018 10:24 pm
If I was a betting man, I'd probably be shorting Turkish stocks right now.
Doesn't shorting a stock market when the value and growth numbers look so good have a ton of potential downside? Not that I am going to do either but I would be much more comfortable with a long term bet on the long side. I guess its possible that both view are right (that is it is a good short in the short term but also good for a long term by and hold position.
http://portfolios.morningstar.com/fund/ ... ture=en-US
Any asset class that is in a clear downward trend is, historically, more likely than not going to continue that trend. But I'm not a betting man.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Pajamas » Wed Aug 01, 2018 2:06 pm

BuyAndHoldOn wrote:
Tue Jul 24, 2018 11:11 am
Is this a good time to buy? ==> What does Turkey do for the world, anyway?
The political aspects are off-topic for discussion here but I thought this article was still worth pointing out for its assessment of the situation in Turkey as far as investing:

https://www.bloomberg.com/view/articles ... investable

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BuyAndHoldOn
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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by BuyAndHoldOn » Tue Aug 07, 2018 9:01 am

Thank you for the comments and perspectives.

Turkey is down even further since I began this thread.


One of my concerns about Turkey/any market that is "down" at a time of general global economic strength is: Will they be even worse of "when the cycle turns"? I.e., when there is an actual risk-off event, and/or global recession.

--> I know Emerging Markets *in general* were down for a number of years, but I think the Global economy was not nearly as strong then (2010-2016) as it is now. Agreed or no?

I am also looking at Malaysia. RA thinks they might be a good bet: https://interactive.researchaffiliates. ... ms=NOMINAL --> be sure to adjust the "View:" so you can see the Sharpe Ratio at the bottom.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by asif408 » Tue Aug 07, 2018 9:28 am

BuyAndHoldOn wrote:
Tue Aug 07, 2018 9:01 am
One of my concerns about Turkey/any market that is "down" at a time of general global economic strength is: Will they be even worse of "when the cycle turns"? I.e., when there is an actual risk-off event, and/or global recession.
I don't think anyone knows the answer to this question.
BuyAndHoldOn wrote:
Tue Aug 07, 2018 9:01 am
I am also looking at Malaysia. RA thinks they might be a good bet: https://interactive.researchaffiliates. ... ms=NOMINAL --> be sure to adjust the "View:" so you can see the Sharpe Ratio at the bottom.
Instead of picking individual countries, why not just buy an EM fund that tilts to value? You'll get Turkey, Malaysia, and others, but at least you won't be concentrated in countries whose valuations keep falling while others are going up. For instance, Russia had the lowest CAPE to start last year and also the worst performance: https://twitter.com/charliebilello/stat ... 0899339265. Picking individual countries is probably just as difficult as picking individual stocks in individual countries.
Last edited by asif408 on Tue Aug 07, 2018 9:46 am, edited 2 times in total.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by randomguy » Tue Aug 07, 2018 9:30 am

willthrill81 wrote:
Fri Jul 27, 2018 12:42 am
fennewaldaj wrote:
Thu Jul 26, 2018 11:03 pm
willthrill81 wrote:
Thu Jul 26, 2018 10:24 pm
If I was a betting man, I'd probably be shorting Turkish stocks right now.
Doesn't shorting a stock market when the value and growth numbers look so good have a ton of potential downside? Not that I am going to do either but I would be much more comfortable with a long term bet on the long side. I guess its possible that both view are right (that is it is a good short in the short term but also good for a long term by and hold position.
http://portfolios.morningstar.com/fund/ ... ture=en-US
Any asset class that is in a clear downward trend is, historically, more likely than not going to continue that trend. But I'm not a betting man.
Up until the day the tend reverses:) Take something like gold
We had a 10 year bull market in the 70s
20 year bear market in the 80s/90s
10 year bull market in 00s
and we have been dropping for the past 5 years. Depending on when you bought you might have done great, ok, or poor.

Everyone is trying to buy gold in 2002 and sell in 1981 (or 2011). It is almost impossible to get the timing close to right though.

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willthrill81
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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by willthrill81 » Tue Aug 07, 2018 10:23 am

randomguy wrote:
Tue Aug 07, 2018 9:30 am
willthrill81 wrote:
Fri Jul 27, 2018 12:42 am
fennewaldaj wrote:
Thu Jul 26, 2018 11:03 pm
willthrill81 wrote:
Thu Jul 26, 2018 10:24 pm
If I was a betting man, I'd probably be shorting Turkish stocks right now.
Doesn't shorting a stock market when the value and growth numbers look so good have a ton of potential downside? Not that I am going to do either but I would be much more comfortable with a long term bet on the long side. I guess its possible that both view are right (that is it is a good short in the short term but also good for a long term by and hold position.
http://portfolios.morningstar.com/fund/ ... ture=en-US
Any asset class that is in a clear downward trend is, historically, more likely than not going to continue that trend. But I'm not a betting man.
Up until the day the tend reverses:) Take something like gold
We had a 10 year bull market in the 70s
20 year bear market in the 80s/90s
10 year bull market in 00s
and we have been dropping for the past 5 years. Depending on when you bought you might have done great, ok, or poor.

Everyone is trying to buy gold in 2002 and sell in 1981 (or 2011). It is almost impossible to get the timing close to right though.
Yes, trends do reverse. That's why it's called trend following.

And trying to sell exactly at the peak and buy exactly at the trough is indeed a fool's errand. But it's not necessary to do either in order to do very well as a trend follower.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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BuyAndHoldOn
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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by BuyAndHoldOn » Tue Aug 07, 2018 10:26 am

asif408 wrote:
Tue Aug 07, 2018 9:28 am
BuyAndHoldOn wrote:
Tue Aug 07, 2018 9:01 am
One of my concerns about Turkey/any market that is "down" at a time of general global economic strength is: Will they be even worse of "when the cycle turns"? I.e., when there is an actual risk-off event, and/or global recession.
I don't think anyone knows the answer to this question.
BuyAndHoldOn wrote:
Tue Aug 07, 2018 9:01 am
I am also looking at Malaysia. RA thinks they might be a good bet: https://interactive.researchaffiliates. ... ms=NOMINAL --> be sure to adjust the "View:" so you can see the Sharpe Ratio at the bottom.
Instead of picking individual countries, why not just buy an EM fund that tilts to value? You'll get Turkey, Malaysia, and others, but at least you won't be concentrated in countries whose valuations keep falling while others are going up. For instance, Russia had the lowest CAPE to start last year and also the worst performance: https://twitter.com/charliebilello/stat ... 0899339265. Picking individual countries is probably just as difficult as picking individual stocks in individual countries.

GVAL - which is not EM per se, of course - was suggested above. I have looked at the ETFs PXH and TLTE.

What EM [value] Funds would you suggest? Do you use any yourself?

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Solo Prosperity » Tue Aug 07, 2018 11:49 am

BuyAndHoldOn wrote:
Tue Aug 07, 2018 10:26 am
What EM [value] Funds would you suggest? Do you use any yourself?
In my b&h portfolio, I hold GVAL and FNDE for EM value exposure (GVAL also has some DM as well) and some IEMG for simple EM market exposure.

In my "fun", self-managed, value portfolio, I hold individual EM country ETFs for EM exposure.

Currently that includes TUR, ERUS, EWZ and EPOL (MSCI still classifies Poland as EM). The rest of that portfolio is US/DM focused.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by asif408 » Tue Aug 07, 2018 1:15 pm

BuyAndHoldOn wrote:
Tue Aug 07, 2018 10:26 am
GVAL - which is not EM per se, of course - was suggested above. I have looked at the ETFs PXH and TLTE.

What EM [value] Funds would you suggest? Do you use any yourself?
I use PXH, and FNDE is one I considered, as they both use the fundamental index approach, so I would recommend either one. I think they do a decent job harvesting the value premium when it shows up (see 2016) and will do worse when it doesn't (see 2017).

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by BuyAndHoldOn » Thu Aug 09, 2018 10:15 am

Turkey Stocks and Lira taking another dive today; I am planning to buy.

EDIT: Tuns out I can buy the ETF Commission Free; I wasn't placing a large order, but I won't "place all my chips on the table" either. Not like I can time the bottom....

I'm not *totally* alone, it looks like. https://www.bnnbloomberg.ca/the-dude-is ... -1.1121341

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by asif408 » Fri Aug 10, 2018 8:37 am

Turkish stock market is down almost 20% to open the day today, OP.........

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by ReformedSpender » Fri Aug 10, 2018 8:58 am

Wild to think that the Turkish stock market is worth $150 billion, roughly the size of Netflix. It makes up less than 1% of Vanguard’s Emerging Markets ETF.

This decline is nothing new however. Turkish debt was downgraded to junk in 2016 and its currency has been falling since 2010.
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Valuethinker » Fri Aug 10, 2018 9:10 am

asif408 wrote:
Fri Aug 10, 2018 8:37 am
Turkish stock market is down almost 20% to open the day today, OP.........
The interactions between factors are painful:

- high current account deficit - country's investment rate exceeds its saving rate (so its net obligations to the world grow)
- government, companies, individuals have borrowed in foreign currency

When the market hits the Wil-E-Coyote moment, then these things all hit at once.

The result is usually the IMF rescue package:

- steep cuts in government spending to bring the deficit under control - especially pensions, education, healthcare
- privatization of state-owned assets (often at fire sale prices), decontrol of parts of the economy
- default on privately held debts, "haircut" for those who lent the country or its citizens money from abroad
- devaluation of the currency
- exchange controls are imposed to stop a further run on the currency

The Fund by its charter has to protect its creditor interest. IMF funding comes with a steep price.

Climbing out of this is long and painful. GDP drops of 10-25% in a year, say. Then slow recovery. See Iceland. Ireland. Greece. SE Asia. Latin America's lost decade of the 1980s. Often there is civil and political unrest - people die in riots and violence. Political turbulence.

These things halve. Then they halve again. Somewhere between 50% and 90% down they stop. But where is anyone's guess.

Patience is rewarded. The rebounds are seldom fast.

Sometimes you get lucky. Rajan was running the Bank of India (later fired for his troubles, or rather crossing swords with the politically powerful domestic banking sector) and acted strongly and with credibility. India managed to turn it without a collapse.

Turkey has toxic politics and a huge civil war raging on its frontier in which its own troops have become involved. The country has some bitter ethnic and political divisions.

I suspect one can afford to wait. There may be some gems in that stock market - Turkey has some leading companies (e.g. in construction). The people are hard working, Turkish engineers are world-class, there are a lot of transplant factories. The national character is pragmatic and hard working. But the bad new is not over - there's no sign that the government grasps the dimensions of the problem nor its proximate causes - too busy blaming outsiders.

I remember when South Korean women queued up outside the Central Bank in the 1997 crisis, to give their wedding rings in to be melted down to fortify the national reserves. Nations like that... nations like that survive. South Korea withstood incorporation into the Japanese Empire and brutal overlordship, then a catastrophic civil war and nearly 70 years of partition. Nations that have that solidarity, that have that sense of self, survive. Nations that do not are... damaged.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by Valuethinker » Fri Aug 10, 2018 9:18 am

BuyAndHoldOn wrote:
Thu Aug 09, 2018 10:15 am
Turkey Stocks and Lira taking another dive today; I am planning to buy.

EDIT: Tuns out I can buy the ETF Commission Free; I wasn't placing a large order, but I won't "place all my chips on the table" either. Not like I can time the bottom....

I'm not *totally* alone, it looks like. https://www.bnnbloomberg.ca/the-dude-is ... -1.1121341
The largest part of the Dude’s firepower this week has been directed at the nation’s biggest private bank. It bought a net 96 million liras worth of shares in Turkiye Garanti Bankasi AS. That was followed by investments in petrochemicals producer Petkim, steelmaker Kardemir, defense equipment producer Aselsan and another steelmaker, Erdemir. Its biggest net sales were in Halkbank, a state-run lender facing the prospect of a fine from the U.S., and media conglomerate Dogan Holding
Banks are usually dangerous in these scenarios - due to their inherent leverage.

The other stocks are exporters - they should be OK *if* they are not heavily indebted in say USD debt, and the disruptions to imports don't strip them of key raw materials or spare parts etc.

They are naturally hedged against TLI falls, by selling to export markets in USD. There are some very good Turkish companies out there.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by hdas » Fri Aug 10, 2018 9:30 am

Valuethinker wrote:
Fri Aug 10, 2018 9:10 am

The result is usually the IMF rescue package:

- steep cuts in government spending to bring the deficit under control - especially pensions, education, healthcare
- privatization of state-owned assets (often at fire sale prices), decontrol of parts of the economy
- default on privately held debts, "haircut" for those who lent the country or its citizens money from abroad
- devaluation of the currency
- exchange controls are imposed to stop a further run on the currency

The Fund by its charter has to protect its creditor interest. IMF funding comes with a steep price.
One would think in the background they would like to enforce a regime change....

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by slayed » Fri Aug 10, 2018 9:45 am

Demographic trends in Turkey do not look good, I would stay away.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by BuyAndHoldOn » Fri Aug 10, 2018 9:45 am

asif408 wrote:
Fri Aug 10, 2018 8:37 am
Turkish stock market is down almost 20% to open the day today, OP.........
Was *at least* 1 day early :? :oops: :shock:

I'll put a little more in today. I understood this was risky.
Last edited by BuyAndHoldOn on Mon Sep 24, 2018 12:45 pm, edited 1 time in total.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by columbia » Fri Aug 10, 2018 9:49 am

slayed wrote:
Fri Aug 10, 2018 9:45 am
Demographic trends in Turkey do not look good, I would stay away.
Its ridiculously low global cap weight aside, it’s one of the reasons that - at a low enough cost - actively managed international holdings should at least be considered: some countries just aren’t worth the associated risk.

(I don’t have an active international fund, but it’s always in the back of my mind.)

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by BuyAndHoldOn » Fri Aug 10, 2018 9:56 am

BuyAndHoldOn wrote:
Fri Aug 10, 2018 9:45 am
asif408 wrote:
Fri Aug 10, 2018 8:37 am
Turkish stock market is down almost 20% to open the day today, OP.........
Was *at least* 1 day early :? :oops: :shock:

I'll put a little more in today. I understood this was risky.
I'm only down $100 :sharebeer

Party on. Glad it's the weekend. (and position is small)
Last edited by BuyAndHoldOn on Mon Sep 24, 2018 12:46 pm, edited 1 time in total.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by grok87 » Fri Aug 10, 2018 10:15 am

grok87 wrote:
Tue Jul 24, 2018 11:28 am
Wait 6 months till they are out of the news
TUR was at 26.84 on july 24th. now at 21.49
Keep calm and Boglehead on. KCBO.

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Re: Turkey/Turkish Stocks down 32% - approaching 2008 levels

Post by BuyAndHoldOn » Fri Aug 10, 2018 10:30 am

grok87 wrote:
Fri Aug 10, 2018 10:15 am
grok87 wrote:
Tue Jul 24, 2018 11:28 am
Wait 6 months till they are out of the news
TUR was at 26.84 on july 24th. now at 21.49
You weren't wrong. I don't know if I am impatient or somehow [was] *expecting* the buying opportunity to go away.

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