Turkey/Turkish Stocks down 32% - approaching 2008 levels

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
h82goslw
Posts: 59
Joined: Fri Jun 17, 2016 5:44 am

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

Post by h82goslw » Fri Aug 10, 2018 10:46 am

Why is such a small country/market having such a disproportionate effect on the US stock market today? I’m not doing anything with my investments but it baffles me why events like this are so (temporarily) toxic at home.

david1082b
Posts: 367
Joined: Fri Jun 09, 2017 12:35 pm

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

Post by david1082b » Fri Aug 10, 2018 10:55 am

h82goslw wrote:
Fri Aug 10, 2018 10:46 am
Why is such a small country/market having such a disproportionate effect on the US stock market today? I’m not doing anything with my investments but it baffles me why events like this are so (temporarily) toxic at home.
40% to 50% of days are down pretty much, is it really Turkish problems causing the stock market in USA to go down? Maybe it's just noise and these things just happen? 0.4% down is a very standard day, happens many times a year.

aristotelian
Posts: 4368
Joined: Wed Jan 11, 2017 8:05 pm

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

Post by aristotelian » Fri Aug 10, 2018 10:59 am

h82goslw wrote:
Fri Aug 10, 2018 10:46 am
Why is such a small country/market having such a disproportionate effect on the US stock market today? I’m not doing anything with my investments but it baffles me why events like this are so (temporarily) toxic at home.
US stocks are barely down at all. Seems about right when a whole country's economy is imploding. Turkey is a member of the EU and known as the "stable" country in the Middle East. Chances just increased of lots of bad things happening that could be bad for business. I'm surprised our market isn't down more.
Last edited by aristotelian on Fri Aug 10, 2018 1:07 pm, edited 1 time in total.

wolf359
Posts: 1302
Joined: Sun Mar 15, 2015 8:47 am

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

Post by wolf359 » Fri Aug 10, 2018 11:22 am

h82goslw wrote:
Fri Aug 10, 2018 10:46 am
Why is such a small country/market having such a disproportionate effect on the US stock market today? I’m not doing anything with my investments but it baffles me why events like this are so (temporarily) toxic at home.
Sometimes big political events create emotional responses in the stock market. For example, the election of a President or a shift in power in Congress (especially when unexpected) will cause the market to shift dramatically (sometimes up, sometimes down.) The unexpected Brexit vote result caused an impact in the British stock market, which affected the US market at the time.

In this case, the big political event was a tweet by the US President announcing a doubling of tariffs against Turkish steel and aluminum. The US accounts for a significant amount of Turkish output. This is obviously bad for Turkey, so their market crashed, as did their currency. Turkey is in Europe, and if it collapses will affect the European markets (e.g. unrest, refugees, immigration.) Additionally, Eurozone banks have loans worth over $150 billion in Turkey. Spanish, French and Italian banks are the most exposed. When European markets drop, the US market usually also drops. We're probably not dropping as much because the US doesn't have the same exposure, and are on the other side of the tariff issue.

Is this event political in nature or economic in nature? Will it have a lasting impact? Those are the types of analysis that is going on in boardrooms and on Wall Street.

I am deliberately stating the facts or what I believe to be direct cause and effect as neutrally as possible, in order to comply with the prohibition on discussing politics. This is to directly answer the question as to why Turkey may be affecting the US market today.

When politics affects the markets, the impact is usually temporary. Emotional reactions will fade. If the event results in more structural or economic changes, then the impact may last longer.

grok87
Posts: 8222
Joined: Tue Feb 27, 2007 9:00 pm

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

Post by grok87 » Fri Aug 10, 2018 11:29 am

BuyAndHoldOn wrote:
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.
i've done the same thing myself.
:)

whenever a stock or a country takes a nosedive, one often hears a lot of chatter about it being oversold. sometimes it helps to put yourself in the shoes of those who own the stock. most likely they are not saying to themselves "boy this is a bad situation i better sell". people hate to admit mistakes and selling means doing that and converting a "paper loss" into a "real loss".

this is one of the main theories about why price momentum exists.

on the flips side, if a stock is going up many folks often sell too early. they say, wow i made some money i better cash in before that evaporates. then they get to pat themselves on the back and tell stories at cocktail parties about what a great investor they are!
:)

the old wall street adage "cut your losses but let your winners run" is there because the innate human tendency is to do the opposite.

cheers,
grok
Keep calm and Boglehead on. KCBO.

J G Bankerton
Posts: 43
Joined: Thu Sep 14, 2017 3:30 pm

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

Post by J G Bankerton » Fri Aug 10, 2018 11:37 am

aristotelian wrote:
Fri Aug 10, 2018 10:59 am
Turkey is a member of the EU
Turkey is still in negotiations with the EU. The negotiations were halted after the purge last year.

Broken Man 1999
Posts: 1279
Joined: Wed Apr 08, 2015 11:31 am

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

Post by Broken Man 1999 » Fri Aug 10, 2018 12:28 pm

Well, at least I was able to buy Vanguard International Stock Index ETF @ a 2% discount so far today, might be off even more later.

With international I am taking baby steps, don't love international, but it's supposed to be good for my portfolio.

Turkey is a mess, and getting messier.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

Starper
Posts: 104
Joined: Sun Oct 26, 2014 10:02 pm

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

Post by Starper » Fri Aug 10, 2018 12:45 pm

Turkey has never been a member of the EU and is very unlikely to become one in the near future.

aristotelian wrote:
Fri Aug 10, 2018 10:59 am
h82goslw wrote:
Fri Aug 10, 2018 10:46 am
Why is such a small country/market having such a disproportionate effect on the US stock market today? I’m not doing anything with my investments but it baffles me why events like this are so (temporarily) toxic at home.
US stocks are barely down at all. Seems about right when a whole country's economy is imploding. Turkey is a member of the EU and known as the "stable" country in the Middle East. Chances just increased of lots of bad things happening that could be bad for business. I'm surprised our market isn't down more.

User avatar
bobcat2
Posts: 5215
Joined: Tue Feb 20, 2007 3:27 pm
Location: just barely Outside the Beltway

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

Post by bobcat2 » Fri Aug 10, 2018 12:46 pm

While the steep decline of the Turkish lira and Turkish capital markets is a terrible problem for the Turkish people, the wider concern is the possibility of contagion to other emerging markets as Turkish problems intensify. The Asian financial crisis in the summer of 1997 began with problems with the Thai currency. There are some worrisome similarities between what happened in Thailand 21 years ago and the tumult in Turkey today.

BTW per Bloomberg earlier this week Turkish officials were scheduled to meet with the IMF and US Treasury officials here in Washington this week. According to Bloomberg it wasn't clear whether the Turks were going to come to Washington or postpone the meetings. I'm not sure what happened to the scheduled meetings.

Asian financial crisis of 1997 - https://www.investopedia.com/terms/a/as ... crisis.asp

BobK
In finance risk is defined as uncertainty that is consequential (nontrivial). | The two main methods of dealing with financial risk are the matching of assets to goals & diversifying.

foamypirate
Posts: 73
Joined: Sun Jul 09, 2017 9:36 pm

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

Post by foamypirate » Fri Aug 10, 2018 12:54 pm

Starper wrote:
Fri Aug 10, 2018 12:45 pm
Turkey has never been a member of the EU and is very unlikely to become one in the near future.

aristotelian wrote:
Fri Aug 10, 2018 10:59 am
h82goslw wrote:
Fri Aug 10, 2018 10:46 am
Why is such a small country/market having such a disproportionate effect on the US stock market today? I’m not doing anything with my investments but it baffles me why events like this are so (temporarily) toxic at home.
US stocks are barely down at all. Seems about right when a whole country's economy is imploding. Turkey is a member of the EU and known as the "stable" country in the Middle East. Chances just increased of lots of bad things happening that could be bad for business. I'm surprised our market isn't down more.
Yes, it's likely EU membership is being confused for NATO membership.

thangngo
Posts: 1129
Joined: Sun Feb 26, 2017 2:08 pm

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

Post by thangngo » Fri Aug 10, 2018 1:06 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? Seems like they are awfully dependent on foreign capital coming into their markets.
Ugh, I'm buying at every paycheck with 15% to EM. I can rebalance but EM is still pretty much within the band... so I guess I'll sit on my hands then :oops:

User avatar
William4u
Posts: 1302
Joined: Fri Jun 01, 2012 3:02 pm

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

Post by William4u » Fri Aug 10, 2018 3:14 pm

Turkey etf down 18% more today alone (was down 21% earlier today). They have some problems that will continue for a while.
The largest exchange-traded fund to track Turkey's equity market plummeted on Friday after the European Central Bank raised questions about a possible contagion from Turkey's embattled currency, according to a report form the Financial Times. President Recep Tayyip Erdogan won reelection in a snap vote in June and his growing power in Ankara has unsettled investors because he threatens the independence of the country's central bank. The iShares MSCI Turkey ETF TUR was down about 18%, at last check but had been down by about 21% earlier. The ETF has extended a recent decline that has seen it drop more than 55% since the start of 2018. At current levels, it is on track for its lowest close since March of 2009, according to FactSet data. The Turkish lira TRYUSD, -13.2613% sank against the U.S. dollar, down about 20%. The currency crisis has spilled over in to broader markets as President Donald Trump said in a tweet on Friday that he has authorized the doubling of existing steel and aluminum tariffs on imports from Turkey.
https://www.marketwatch.com/story/turke ... 2018-08-10

3funder
Posts: 640
Joined: Sun Oct 15, 2017 9:35 pm

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

Post by 3funder » Fri Aug 10, 2018 3:19 pm

arcticpineapplecorp. wrote:
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
+1.

User avatar
oldzey
Posts: 950
Joined: Sun Apr 13, 2014 8:38 pm
Location: Land of Lincoln

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

Post by oldzey » Fri Aug 10, 2018 3:28 pm

0% International works for me.

Stay the course! :beer
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

Valuethinker
Posts: 35301
Joined: Fri May 11, 2007 11:07 am

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

Post by Valuethinker » Fri Aug 10, 2018 3:29 pm

wolf359 wrote:
Fri Aug 10, 2018 11:22 am
h82goslw wrote:
Fri Aug 10, 2018 10:46 am
Why is such a small country/market having such a disproportionate effect on the US stock market today? I’m not doing anything with my investments but it baffles me why events like this are so (temporarily) toxic at home.
Sometimes big political events create emotional responses in the stock market. For example, the election of a President or a shift in power in Congress (especially when unexpected) will cause the market to shift dramatically (sometimes up, sometimes down.) The unexpected Brexit vote result caused an impact in the British stock market, which affected the US market at the time.

In this case, the big political event was a tweet by the US President announcing a doubling of tariffs against Turkish steel and aluminum. The US accounts for a significant amount of Turkish output. This is obviously bad for Turkey, so their market crashed, as did their currency. Turkey is in Europe, and if it collapses will affect the European markets (e.g. unrest, refugees, immigration.)
Turkey is in NATO. An American sponsored alliance.

It is not in the European Union.

A small part of Turkey is West of the Bosphorus and thus geographically "in Europe".

There is no free movement of people between Turkey and EU countries. There has not been mass migration between Turkey and Europe since the early 1970s.

Whatever the economic problems of Turkey it will not directly lead to Turkish "refugees" any more than Americans swarmed the Canadian border in 2008 2009.

The refugee issue is much more complex and is around Syrian refugees passing through Turkey to Europe. Right now that is stopped via agreement between governments.

Additionally, Eurozone banks have loans worth over $150 billion in Turkey. Spanish, French and Italian banks are the most exposed. When European markevts drop, the US market usually also drops. We're probably not dropping as much because the US doesn't have the same exposure, and are on the other side of the tariff issue.

Is this event political in nature or economic in nature? Will it have a lasting impact? Those are the types of analysis that is going on in boardrooms and on Wall Street.

I am deliberately stating the facts or what I believe to be direct cause and effect as neutrally as possible, in order to comply with the prohibition on discussing politics. This is to directly answer the question as to why Turkey may be affecting the US market today.

When politics affects the markets, the impact is usually temporary. Emotional reactions will fade. If the event results in more structural or economic changes, then the impact may last longer.
Turkey has had all the ingredients of an EM crash for years. It is finally happening. How far down it goes is anybody's guess. But the economic fundamentals have been in place for several years and people like the IMF have been warning for years.

alter
Posts: 95
Joined: Thu Feb 26, 2015 11:27 pm

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

Post by alter » Fri Aug 10, 2018 4:24 pm

wolf359 wrote:
Fri Aug 10, 2018 11:22 am
h82goslw wrote:
Fri Aug 10, 2018 10:46 am
Why is such a small country/market having such a disproportionate effect on the US stock market today? I’m not doing anything with my investments but it baffles me why events like this are so (temporarily) toxic at home.

In this case, the big political event was a tweet by the US President announcing a doubling of tariffs against Turkish steel and aluminum. The US accounts for a significant amount of Turkish output. This is obviously bad for Turkey, so their market crashed, as did their currency. Turkey is in Europe, and if it collapses will affect the European markets (e.g. unrest, refugees, immigration.) Additionally, Eurozone banks have loans worth over $150 billion in Turkey. Spanish, French and Italian banks are the most exposed. When European markets drop, the US market usually also drops. We're probably not dropping as much because the US doesn't have the same exposure, and are on the other side of the tariff issue.
Sorry but their currency was already crashing long before the tariff announcement.

DesertDiva
Posts: 141
Joined: Thu Mar 01, 2018 12:49 pm

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

Post by DesertDiva » Fri Aug 10, 2018 4:52 pm

BuyAndHoldOn wrote:
Tue Jul 24, 2018 11:11 am
Is this a good time to buy?
...
(Don't worry, this is more for discussion than serious consideration).
...
It's always a good time to invest in Total-Market/Total-International index funds :happy

User avatar
BuyAndHoldOn
Posts: 174
Joined: Mon Mar 30, 2015 6:51 pm

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

Post by BuyAndHoldOn » Fri Aug 10, 2018 6:04 pm

grok87 wrote:
Fri Aug 10, 2018 11:29 am
BuyAndHoldOn wrote:
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.
i've done the same thing myself.
:)

...

the old wall street adage "cut your losses but let your winners run" is there because the innate human tendency is to do the opposite.

Not disputing what you said, but I fully intend to hold what I have purchased. I don't know if I will keep buying more (I did today), but I think Turkish stocks (plus the currency) will be worth much more in a few years than they are now. Even if they keep going down from here.

And again for context: This is small position, a few hundred dollars only.
DesertDiva wrote:
Fri Aug 10, 2018 4:52 pm
BuyAndHoldOn wrote:
Tue Jul 24, 2018 11:11 am
Is this a good time to buy?
...
(Don't worry, this is more for discussion than serious consideration).
...
It's always a good time to invest in Total-Market/Total-International index funds :happy
Agreed. I bought some of those today too :happy --> Easy decision. I doubt Turkey will derail the global economy, even if Turkey struggles for a while.

UpperNwGuy
Posts: 692
Joined: Sun Oct 08, 2017 7:16 pm
Location: Washington DC

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

Post by UpperNwGuy » Fri Aug 10, 2018 6:22 pm

Turkey is such a small portion of the Total International Stock Index Fund, yet the fund lost nearly 2% today. I'm ready to seriously rethink the international stock portion (33%) of my equity allocation. And this isn't about market timing. It seems to be an recurring pattern. Something bad happens to one country out of 100, and the entire international fund takes a dive that is out of proportion to that country's market capitalization.

User avatar
willthrill81
Posts: 5007
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

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

Post by willthrill81 » Fri Aug 10, 2018 7:41 pm

UpperNwGuy wrote:
Fri Aug 10, 2018 6:22 pm
Turkey is such a small portion of the Total International Stock Index Fund, yet the fund lost nearly 2% today. I'm ready to seriously rethink the international stock portion (33%) of my equity allocation. And this isn't about market timing. It seems to be an recurring pattern. Something bad happens to one country out of 100, and the entire international fund takes a dive that is out of proportion to that country's market capitalization.
And increasingly, if the U.S. takes a dive, so does international. Seemingly all of the downside without the upside.
“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

Valuethinker
Posts: 35301
Joined: Fri May 11, 2007 11:07 am

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

Post by Valuethinker » Sat Aug 11, 2018 2:05 am

UpperNwGuy wrote:
Fri Aug 10, 2018 6:22 pm
Turkey is such a small portion of the Total International Stock Index Fund, yet the fund lost nearly 2% today. I'm ready to seriously rethink the international stock portion (33%) of my equity allocation. And this isn't about market timing. It seems to be an recurring pattern. Something bad happens to one country out of 100, and the entire international fund takes a dive that is out of proportion to that country's market capitalization.
The issue is, apparently, re European banks that have lent money in Turkey.

As long as the tech sector holds up the US will outperform.

If you cannot live with the volatility then international stocks may not be worth it for you.

For those f us not US based the US is over half international indices and that seems to be enough.

Valuethinker
Posts: 35301
Joined: Fri May 11, 2007 11:07 am

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

Post by Valuethinker » Sat Aug 11, 2018 2:08 am

alter wrote:
Fri Aug 10, 2018 4:24 pm
wolf359 wrote:
Fri Aug 10, 2018 11:22 am
h82goslw wrote:
Fri Aug 10, 2018 10:46 am
Why is such a small country/market having such a disproportionate effect on the US stock market today? I’m not doing anything with my investments but it baffles me why events like this are so (temporarily) toxic at home.

In this case, the big political event was a tweet by the US President announcing a doubling of tariffs against Turkish steel and aluminum. The US accounts for a significant amount of Turkish output. This is obviously bad for Turkey, so their market crashed, as did their currency. Turkey is in Europe, and if it collapses will affect the European markets (e.g. unrest, refugees, immigration.) Additionally, Eurozone banks have loans worth over $150 billion in Turkey. Spanish, French and Italian banks are the most exposed. When European markets drop, the US market usually also drops. We're probably not dropping as much because the US doesn't have the same exposure, and are on the other side of the tariff issue.
Sorry but their currency was already crashing long before the tariff announcement.
Markets are strange that way.

They know the bad news and they ignore it. The crisis never seems to happen.

Then an event like the nephew of the Thai Prime Minister going broke, happens. And suddenly all if SE Asia is crashing.

They hit a "tipping point" and everyone tries to get out the exit at once.

The tariff tweet appears to have been a sort of tipping point.

User avatar
Lauretta
Posts: 670
Joined: Wed Jul 05, 2017 6:27 am

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

Post by Lauretta » Sat Aug 11, 2018 4:26 am

willthrill81 wrote:
Fri Aug 10, 2018 7:41 pm
UpperNwGuy wrote:
Fri Aug 10, 2018 6:22 pm
Turkey is such a small portion of the Total International Stock Index Fund, yet the fund lost nearly 2% today. I'm ready to seriously rethink the international stock portion (33%) of my equity allocation. And this isn't about market timing. It seems to be an recurring pattern. Something bad happens to one country out of 100, and the entire international fund takes a dive that is out of proportion to that country's market capitalization.
And increasingly, if the U.S. takes a dive, so does international. Seemingly all of the downside without the upside.
In a video of the Bogleheads annual meeting (I think it was for 2017) Mr Bernstein said that if US took a dive, then EM would initially dive too; but on the longer term EM in would likely recover and outperform (because of factors like valuations, demography etc). He was speaking in the context of EM but probably the same is applicable to international developed because of lower valuations. So the idea that if the US market plummets it brings the rest of the world with it may be true on the short term but not longer term.
When everyone is thinking the same, no one is thinking at all

asif408
Posts: 1354
Joined: Sun Mar 02, 2014 8:34 am
Location: Florida

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

Post by asif408 » Sat Aug 11, 2018 6:04 am

Lauretta wrote:
Sat Aug 11, 2018 4:26 am
willthrill81 wrote:
Fri Aug 10, 2018 7:41 pm
UpperNwGuy wrote:
Fri Aug 10, 2018 6:22 pm
Turkey is such a small portion of the Total International Stock Index Fund, yet the fund lost nearly 2% today. I'm ready to seriously rethink the international stock portion (33%) of my equity allocation. And this isn't about market timing. It seems to be an recurring pattern. Something bad happens to one country out of 100, and the entire international fund takes a dive that is out of proportion to that country's market capitalization.
And increasingly, if the U.S. takes a dive, so does international. Seemingly all of the downside without the upside.
In a video of the Bogleheads annual meeting (I think it was for 2017) Mr Bernstein said that if US took a dive, then EM would initially dive too; but on the longer term EM in would likely recover and outperform (because of factors like valuations, demography etc). He was speaking in the context of EM but probably the same is applicable to international developed because of lower valuations. So the idea that if the US market plummets it brings the rest of the world with it may be true on the short term but not longer term.
There is a precedent for that, see the following chart: http://quotes.morningstar.com/chart/fun ... 2%3A955%7D

EM and developed markets fell harder and farther during the dot com crash of 2000-2002, but recovered faster and outperformed going forward in the 2000-2010 decade, even including the financial crisis. So anyone holding international needs to understand it probably won't protect you from falling when the market is falling, but it will likely do better during the recovery phase if starting valuations are lower overseas. Certainly EM valuations were much lower relative to US valuations in 2000 as they are today, but developed markets were not, so the performance differential between EM and everyone else was pretty dramatic. This time around developed markets are also a good bit lower, I believe the relative valuations between EAFE and the US are as far apart as they've been since the 1970s, which preceded a time period of international outperformance.

But I think most holders of international will react more like UpperNWGuy during times like these, which would probably indicate he should either limit or eliminate his international position permanently, because jumping in and out will do more harm than good in the long run. He just has to commit to not coming back in if it starts to outperform. Those with enough patience and fortitude can certainly hold as much international as they want, but at least from the postings here the last few years, it seems like most don't have the patience to have significant international holdings.

Stormbringer
Posts: 547
Joined: Sun Jun 14, 2015 7:07 am

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

Post by Stormbringer » Sat Aug 11, 2018 6:07 am

There is a contagion risk with Turkey. It has $466 billion in foreign debt (about 80% dollars, 20% euros) vs about $850 billion GDP. With the Lira falling precipitously, this makes it really difficult to to service those loans. European banks are particularly exposed.

As we all know, the key to good government is to pack all the positions of power with loyal family members. In this spirit, Erdogan recently named his son-in-law as the Minister of Finance and Treasury, so he'll be in charge of leading the country out of this mess.
"Compound interest is the most powerful force in the universe." - Albert Einstein

grok87
Posts: 8222
Joined: Tue Feb 27, 2007 9:00 pm

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

Post by grok87 » Sat Aug 11, 2018 6:10 am

BuyAndHoldOn wrote:
Fri Aug 10, 2018 6:04 pm
grok87 wrote:
Fri Aug 10, 2018 11:29 am
BuyAndHoldOn wrote:
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.
i've done the same thing myself.
:)

...

the old wall street adage "cut your losses but let your winners run" is there because the innate human tendency is to do the opposite.

Not disputing what you said, but I fully intend to hold what I have purchased. I don't know if I will keep buying more (I did today), but I think Turkish stocks (plus the currency) will be worth much more in a few years than they are now. Even if they keep going down from here.

And again for context: This is small position, a few hundred dollars only.
thanks.
Keep calm and Boglehead on. KCBO.

User avatar
ReformedSpender
Posts: 129
Joined: Fri Mar 16, 2018 1:24 pm
Location: Stone's Throw from Vanguard

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

Post by ReformedSpender » Sat Aug 11, 2018 6:40 am

VTIAX price/earning ratio of 14.1 compared to VTSAX at 20.8. Just saying.

:beer
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.

UpperNwGuy
Posts: 692
Joined: Sun Oct 08, 2017 7:16 pm
Location: Washington DC

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

Post by UpperNwGuy » Sat Aug 11, 2018 7:50 am

Valuethinker wrote:
Sat Aug 11, 2018 2:05 am
UpperNwGuy wrote:
Fri Aug 10, 2018 6:22 pm
Turkey is such a small portion of the Total International Stock Index Fund, yet the fund lost nearly 2% today. I'm ready to seriously rethink the international stock portion (33%) of my equity allocation. And this isn't about market timing. It seems to be an recurring pattern. Something bad happens to one country out of 100, and the entire international fund takes a dive that is out of proportion to that country's market capitalization.
The issue is, apparently, re European banks that have lent money in Turkey.

As long as the tech sector holds up the US will outperform.

If you cannot live with the volatility then international stocks may not be worth it for you.

For those f us not US based the US is over half international indices and that seems to be enough.
I am leaning toward a middle ground: reduce the international share of my portfolio without eliminating it completely. I'm probably going to go from 33% to the 20% that Taylor Larrimore recommends.

By the way, your description of your non-US based international index sounds very much like Vanguard's Total World Stock Market Fund.

Valuethinker
Posts: 35301
Joined: Fri May 11, 2007 11:07 am

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

Post by Valuethinker » Sat Aug 11, 2018 8:13 am

UpperNwGuy wrote:
Sat Aug 11, 2018 7:50 am
Valuethinker wrote:
Sat Aug 11, 2018 2:05 am
UpperNwGuy wrote:
Fri Aug 10, 2018 6:22 pm
Turkey is such a small portion of the Total International Stock Index Fund, yet the fund lost nearly 2% today. I'm ready to seriously rethink the international stock portion (33%) of my equity allocation. And this isn't about market timing. It seems to be an recurring pattern. Something bad happens to one country out of 100, and the entire international fund takes a dive that is out of proportion to that country's market capitalization.
The issue is, apparently, re European banks that have lent money in Turkey.

As long as the tech sector holds up the US will outperform.

If you cannot live with the volatility then international stocks may not be worth it for you.

For those f us not US based the US is over half international indices and that seems to be enough.
I am leaning toward a middle ground: reduce the international share of my portfolio without eliminating it completely. I'm probably going to go from 33% to the 20% that Taylor Larrimore recommends.

By the way, your description of your non-US based international index sounds very much like Vanguard's Total World Stock Market Fund.
It should do, if I understand your point correctly? If you take a total world index, then US is 50-60% of it (depending on whether you include EM). That would be true for any investor, regardless of your home market.

20% is definitely going to give you lower volatility. Below that it is probably not worth having a weighting at all.

libralibra
Posts: 182
Joined: Sat Jul 30, 2011 2:01 pm

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

Post by libralibra » Sat Aug 11, 2018 1:21 pm

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
Fun Fact: Nasdaq stocks add a "D" to the ticker for 20 days following a reverse split. The one I remember was "FIRE" that did a reverse split during the dotcom meltdown and massive layoffs. This one would be even more ironic.

User avatar
whodidntante
Posts: 3713
Joined: Thu Jan 21, 2016 11:11 pm

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

Post by whodidntante » Sat Aug 11, 2018 1:41 pm

willthrill81 wrote:
Fri Aug 10, 2018 7:41 pm

And increasingly, if the U.S. takes a dive, so does international. Seemingly all of the downside without the upside.
It doesn't take much looking to find periods of significant cross sectional outperformance for foreign stocks. There are a lot of moving parts in the global economy and I would be surprised if that never happens again. I'm aware you are a trend follower. Has your system signalled you to be out of ex-USA right now, or do you only invest in domestic stocks?

User avatar
willthrill81
Posts: 5007
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

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

Post by willthrill81 » Sat Aug 11, 2018 2:08 pm

whodidntante wrote:
Sat Aug 11, 2018 1:41 pm
willthrill81 wrote:
Fri Aug 10, 2018 7:41 pm

And increasingly, if the U.S. takes a dive, so does international. Seemingly all of the downside without the upside.
It doesn't take much looking to find periods of significant cross sectional outperformance for foreign stocks. There are a lot of moving parts in the global economy and I would be surprised if that never happens again. I'm aware you are a trend follower. Has your system signalled you to be out of ex-USA right now, or do you only invest in domestic stocks?
US equities have been outperforming international for the last seven months, so I'm in the former. If/when the latter starts outperforming over a seven month period, I'll move there. That hasn't happened for years though.

My comment was more in line with international's performance in recent times and not intended to be a statement regarding the entirety of the available data. I should have been clearer.

FWIW, international had higher returns than U.S. in 2017, 2012, 2009, 2007, and 2003-2005. But from 2000 until now, international has averaged more than 2% lower returns than U.S. and with greater volatility and a deeper drawdown to boot.
“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

Valuethinker
Posts: 35301
Joined: Fri May 11, 2007 11:07 am

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

Post by Valuethinker » Sat Aug 11, 2018 4:16 pm

willthrill81 wrote:
Sat Aug 11, 2018 2:08 pm
whodidntante wrote:
Sat Aug 11, 2018 1:41 pm
willthrill81 wrote:
Fri Aug 10, 2018 7:41 pm

And increasingly, if the U.S. takes a dive, so does international. Seemingly all of the downside without the upside.
It doesn't take much looking to find periods of significant cross sectional outperformance for foreign stocks. There are a lot of moving parts in the global economy and I would be surprised if that never happens again. I'm aware you are a trend follower. Has your system signalled you to be out of ex-USA right now, or do you only invest in domestic stocks?
US equities have been outperforming international for the last seven months, so I'm in the former. If/when the latter starts outperforming over a seven month period, I'll move there. That hasn't happened for years though.

My comment was more in line with international's performance in recent times and not intended to be a statement regarding the entirety of the available data. I should have been clearer.

FWIW, international had higher returns than U.S. in 2017, 2012, 2009, 2007, and 2003-2005. But from 2000 until now, international has averaged more than 2% lower returns than U.S. and with greater volatility and a deeper drawdown to boot.
Why 7 months?

As opposed to 5 months or 6 months. Or 12?

UpperNwGuy
Posts: 692
Joined: Sun Oct 08, 2017 7:16 pm
Location: Washington DC

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

Post by UpperNwGuy » Sat Aug 11, 2018 4:37 pm

willthrill81 wrote:
Sat Aug 11, 2018 2:08 pm
FWIW, international had higher returns than U.S. in 2017, 2012, 2009, 2007, and 2003-2005. But from 2000 until now, international has averaged more than 2% lower returns than U.S. and with greater volatility and a deeper drawdown to boot.
^^ THIS is what bothers me the most about international.

User avatar
willthrill81
Posts: 5007
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

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

Post by willthrill81 » Sat Aug 11, 2018 8:49 pm

Valuethinker wrote:
Sat Aug 11, 2018 4:16 pm
willthrill81 wrote:
Sat Aug 11, 2018 2:08 pm
whodidntante wrote:
Sat Aug 11, 2018 1:41 pm
willthrill81 wrote:
Fri Aug 10, 2018 7:41 pm

And increasingly, if the U.S. takes a dive, so does international. Seemingly all of the downside without the upside.
It doesn't take much looking to find periods of significant cross sectional outperformance for foreign stocks. There are a lot of moving parts in the global economy and I would be surprised if that never happens again. I'm aware you are a trend follower. Has your system signalled you to be out of ex-USA right now, or do you only invest in domestic stocks?
US equities have been outperforming international for the last seven months, so I'm in the former. If/when the latter starts outperforming over a seven month period, I'll move there. That hasn't happened for years though.

My comment was more in line with international's performance in recent times and not intended to be a statement regarding the entirety of the available data. I should have been clearer.

FWIW, international had higher returns than U.S. in 2017, 2012, 2009, 2007, and 2003-2005. But from 2000 until now, international has averaged more than 2% lower returns than U.S. and with greater volatility and a deeper drawdown to boot.
Why 7 months?

As opposed to 5 months or 6 months. Or 12?
Any period from 3 months to well over a year has similar long-term results. I just like the seven month period because it strikes what I deem to be a good balance between moving with the trends and minimizing trading.
“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

columbia
Posts: 776
Joined: Tue Aug 27, 2013 5:30 am

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

Post by columbia » Sun Aug 12, 2018 6:21 am

asif408 wrote:
Sat Aug 11, 2018 6:04 am
Lauretta wrote:
Sat Aug 11, 2018 4:26 am
willthrill81 wrote:
Fri Aug 10, 2018 7:41 pm
UpperNwGuy wrote:
Fri Aug 10, 2018 6:22 pm
Turkey is such a small portion of the Total International Stock Index Fund, yet the fund lost nearly 2% today. I'm ready to seriously rethink the international stock portion (33%) of my equity allocation. And this isn't about market timing. It seems to be an recurring pattern. Something bad happens to one country out of 100, and the entire international fund takes a dive that is out of proportion to that country's market capitalization.
And increasingly, if the U.S. takes a dive, so does international. Seemingly all of the downside without the upside.
In a video of the Bogleheads annual meeting (I think it was for 2017) Mr Bernstein said that if US took a dive, then EM would initially dive too; but on the longer term EM in would likely recover and outperform (because of factors like valuations, demography etc). He was speaking in the context of EM but probably the same is applicable to international developed because of lower valuations. So the idea that if the US market plummets it brings the rest of the world with it may be true on the short term but not longer term.
There is a precedent for that, see the following chart: http://quotes.morningstar.com/chart/fun ... 2%3A955%7D

EM and developed markets fell harder and farther during the dot com crash of 2000-2002, but recovered faster and outperformed going forward in the 2000-2010 decade, even including the financial crisis. So anyone holding international needs to understand it probably won't protect you from falling when the market is falling, but it will likely do better during the recovery phase if starting valuations are lower overseas. Certainly EM valuations were much lower relative to US valuations in 2000 as they are today, but developed markets were not, so the performance differential between EM and everyone else was pretty dramatic. This time around developed markets are also a good bit lower, I believe the relative valuations between EAFE and the US are as far apart as they've been since the 1970s, which preceded a time period of international outperformance.

But I think most holders of international will react more like UpperNWGuy during times like these, which would probably indicate he should either limit or eliminate his international position permanently, because jumping in and out will do more harm than good in the long run. He just has to commit to not coming back in if it starts to outperform. Those with enough patience and fortitude can certainly hold as much international as they want, but at least from the postings here the last few years, it seems like most don't have the patience to have significant international holdings.

2008-present:
https://www.portfoliovisualizer.com/bac ... arket2=100

EM fell further in 2008 and rebounded massively in 2009. It’s also returned 0.65% annually from 2008-present. Unless you’re (successfully) market timing between different asset classes, I’d be careful about relying on EM to save the day.

User avatar
BuyAndHoldOn
Posts: 174
Joined: Mon Mar 30, 2015 6:51 pm

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

Post by BuyAndHoldOn » Sun Aug 12, 2018 9:17 am

Looks like I have company. I would be interested to know who else I call "comrade" in this situation --> Hedge funds, retail investors like me, etc. [EDIT: Checked "Ownership" of TUR ETF in Fidelity - big owners are a bunch of Misc Hedge Funds, and mutual Funds; also includes Tennessee Treasury Dept. All purchasing in 2018/late 2017 in the case of Mutual Funds; but the 13F filings only go to June 30 2018]

I would expect, based on what is reported below [presuming accuracy], that foreigners/non-Turks own the majority of Turkish financial assets period.

https://www.nytimes.com/2018/08/11/busi ... risis.html

"American investors, for example, own nearly 25 percent of outstanding Turkish bonds and more than half of publicly traded Turkish stocks, according to the I.I.F."

J G Bankerton
Posts: 43
Joined: Thu Sep 14, 2017 3:30 pm

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

Post by J G Bankerton » Sun Aug 12, 2018 9:24 pm

UpperNwGuy wrote:
Fri Aug 10, 2018 6:22 pm
Turkey is such a small portion of the Total International Stock Index Fund, yet the fund lost nearly 2% today
It's not just the stock but the dollar too is at play. The fund is not hedges so as the dollar gets stronger the relative value of other currencies the fund is worth less.

AlphaLess
Posts: 342
Joined: Fri Sep 29, 2017 11:38 pm

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

Post by AlphaLess » Sun Aug 12, 2018 9:26 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? 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/
I would not buy a company that I potentially viewed as bankrupt.
It appears that the current Turkish leadership has poor understanding of economic and financial principles (in addition to having poor understanding in other respects of governance as well).

AlphaLess
Posts: 342
Joined: Fri Sep 29, 2017 11:38 pm

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

Post by AlphaLess » Sun Aug 12, 2018 9:28 pm

Valuethinker wrote:
Sat Aug 11, 2018 2:05 am
For those f us not US based the US is over half international indices and that seems to be enough.
Big time upvote!

selters
Posts: 586
Joined: Thu Feb 27, 2014 9:26 am

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

Post by selters » Mon Aug 13, 2018 6:59 am

Turkey's stock market had a P/E of 7 (and a forward P/E of 6) on 31 July. TUR (iShares Turkey ETF) is down 35% since then. It may be a candidate for some play money. But have an entry/exit strategy, because this may be going to 0. I don't think so, but I wouldn't be absolutely shocked to see Turkey's $35 bn stock market nationalized.

Valuethinker
Posts: 35301
Joined: Fri May 11, 2007 11:07 am

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

Post by Valuethinker » Mon Aug 13, 2018 7:39 am

selters wrote:
Mon Aug 13, 2018 6:59 am
Turkey's stock market had a P/E of 7 (and a forward P/E of 6) on 31 July. TUR (iShares Turkey ETF) is down 35% since then. It may be a candidate for some play money. But have an entry/exit strategy, because this may be going to 0. I don't think so, but I wouldn't be absolutely shocked to see Turkey's $35 bn stock market nationalized.
The historic PE will be essentially meaningless given the exchange rate and economic volatility.

The forward PEs will not reflect recent currency moves etc.

For financials it's really impossible to say. Stocks like FNMA and FMAC were on say 7-8x PE in the spring of 2008. However their earnings were about to implode.

That said the pure exporters probably *are* cheap to very cheap. However strange things happen during currency crises, including possible freezes in their bank accounts, etc. In principle a fall in currency benefits them, but if they have borrowed in USD or EUR and not hedged back to TLI, then they could be technically insolvent.

I did not realize the market cap of Turkey was down to USD 35 bn. One would think it worth a punt, then, however the provisos above apply and you probably cannot put enough into your portfolio, given the risks, to make a meaningful difference.

The broader impact on EM remains a concern. I believe notionally similar states include Mexico, Indonesia and some others (not that the circumstances are duplicated, but there are political-economic-trade issues that are similar). The "flight to safety" is probably started and risk will be the story of EM going forward, rather than prospective returns. And there are European banks.

Like you, I would not rule out a nationalization of/ recapitalization of the banking sector before this is all over.

foo.c
Posts: 34
Joined: Sat Jul 15, 2017 4:55 pm

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

Post by foo.c » Mon Aug 13, 2018 7:44 am

I bought 100 shares of TUR in pre-market. Such a baller ...

User avatar
BuyAndHoldOn
Posts: 174
Joined: Mon Mar 30, 2015 6:51 pm

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

Post by BuyAndHoldOn » Mon Aug 13, 2018 9:10 am

foo.c wrote:
Mon Aug 13, 2018 7:44 am
I bought 100 shares of TUR in pre-market. Such a baller ...

You are a baller :greedy I have 34 shares [EDIT: went back for 6 more, now 40 shares :? :happy :D ]; and after buying a few more today: My cost basis is at or below the 2009 low for TUR.

But that's all for me. Buying only today puts you well below the 2009 low. TUR could go up or down from here, and I'm not changing the position amount. To have and to hold...and also to risk manage.
Last edited by BuyAndHoldOn on Tue Aug 14, 2018 9:13 am, edited 1 time in total.

User avatar
ps56k
Posts: 793
Joined: Sat Mar 19, 2011 1:28 pm
Location: Chicago area

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

Post by ps56k » Mon Aug 13, 2018 2:12 pm

Just a quick look at both the EM total stock, and the EM total bond - Turkey -

VWO - stock - 0.9% - https://investor.vanguard.com/etf/profile/portfolio/vwo
VWOB - bond - 4.3% - https://investor.vanguard.com/etf/profi ... folio/VWOB

Valuethinker
Posts: 35301
Joined: Fri May 11, 2007 11:07 am

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

Post by Valuethinker » Mon Aug 13, 2018 3:41 pm

ps56k wrote:
Mon Aug 13, 2018 2:12 pm
Just a quick look at both the EM total stock, and the EM total bond - Turkey -

VWO - stock - 0.9% - https://investor.vanguard.com/etf/profile/portfolio/vwo
VWOB - bond - 4.3% - https://investor.vanguard.com/etf/profi ... folio/VWOB
Underlining my issue with EM bonds. The weightings are driven by the funding needs of the countries, and so you get more bonds issued by fiscally weaker countries. When the event risk hits, you are left with more bonds from places you do not want.

User avatar
willthrill81
Posts: 5007
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

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

Post by willthrill81 » Mon Aug 13, 2018 3:51 pm

willthrill81 wrote:
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.
FWIW, TUR is still falling like an Arkansas toothpick. It's a whopping 40% below its 200 day moving average.
“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

Post Reply