Turkey

Capital markets in Turkey got smacked hard due to worries about the coming presidential election. Stocks opened 8% lower but finished 4% lower. The lira fell over 2% against the US dollar and debt yields went up dramatically. Things like this come up every now and then with emerging markets. I am a huge fan of the space but they have had a great run over the last couple of years and for about the last year I have been urging moderation and have occasionally cut back exposure. Longer term the story in Turkey is very compelling. The population is very young (average age in the early 20’s) and large (close to 70 million). Growth is good, the country is on the road to EU ascension (admittedly a very long road) and they benefit from a new oil pipeline. This is a country that I think will become more important on the world stage but it will be a bumpy ride. I have traded the Turkish Investment Fund (TKF) in the past but have no plans to revisit it soon. iShares has filed for a Turkish ETF. You can click here and here for the articles I read about today’s action in...

Turkey

Capital markets in Turkey got smacked hard due to worries about the coming presidential election. Stocks opened 8% lower but finished 4% lower. The lira fell over 2% against the US dollar and debt yields went up dramatically. Things like this come up every now and then with emerging markets. I am a huge fan of the space but they have had a great run over the last couple of years and for about the last year I have been urging moderation and have occasionally cut back exposure. Longer term the story in Turkey is very compelling. The population is very young (average age in the early 20’s) and large (close to 70 million). Growth is good, the country is on the road to EU ascension (admittedly a very long road) and they benefit from a new oil pipeline. This is a country that I think will become more important on the world stage but it will be a bumpy ride. I have traded the Turkish Investment Fund (TKF) in the past but have no plans to revisit it soon. iShares has filed for a Turkish ETF. You can click here and here for the articles I read about today’s action in...

From Russia With Love

You probably know that Van Eck has finally listed its long awaited Russia ETF (RSX). You can click here for more info from Van Eck. The fund is very heavy in energy at 40%. It is very heavy in several energy stocks you have heard of like Gazprom, Lukoil (client and personal holding), Rosneft and a few others. In a few days or so I suspect the usual suspects will tell you to run from the room with your hands above your head and that you should scream while doing so. That of course would miss the point. RSX offers exposure to a country with a low economic correlation to the US and a low stock market correlation. Russia has a much higher growth rate, surpluses of all sorts created by energy and a very strong currency. The biggest wildcard is of course the political whims of Vladimir Putin. I think another Yukos is unlikely (not saying impossible) as it could cause a dramatic panic out of the country. The business from a year and half ago where the gas to the Ukraine was turned off shows that there could be problems in the...

From Russia With Love

You probably know that Van Eck has finally listed its long awaited Russia ETF (RSX). You can click here for more info from Van Eck. The fund is very heavy in energy at 40%. It is very heavy in several energy stocks you have heard of like Gazprom, Lukoil (client and personal holding), Rosneft and a few others. In a few days or so I suspect the usual suspects will tell you to run from the room with your hands above your head and that you should scream while doing so. That of course would miss the point. RSX offers exposure to a country with a low economic correlation to the US and a low stock market correlation. Russia has a much higher growth rate, surpluses of all sorts created by energy and a very strong currency. The biggest wildcard is of course the political whims of Vladimir Putin. I think another Yukos is unlikely (not saying impossible) as it could cause a dramatic panic out of the country. The business from a year and half ago where the gas to the Ukraine was turned off shows that there could be problems in the...

Sell In May?

I received the following question; What’s your current thinking this year to the old adage: “Sell in May and go away”? (for the summer that is, for the folks not familiar with the saying) I’m in a rather large 40% cash position at the present time. I don’t really act on these sorts of things in a meaningful way for a couple of reasons; first is that there may not a enough of a fundamental case to do it. The second reason is that I think I heard recently that it only works 54% of the time. I may have that wrong. I can also recall, however, another study that showed the market does much better from November until May by a dramatic amount. The nature of this second study I am vaguely remembering focuses more on better returns during the winter as opposed to declines in the summer. Anyone with specifics on either is encouraged to leave the links. Obviously in 2006 sell in May was 180 degrees wrong. In looking at the Stock Trader’s Almanac for the last ten years from May to October inclusive sell in May was also wrong in 2005, 2003, 1999 and 1997. Selling in May looks like it was right in 2002, 2001, 2000 and 1998 and I am going to say it was a push in 2004. I did not look further back due to time constraints and I would not really be able to defend an argument that says the time sampled is flawed, maybe because it includes the bubble and the aftermath. Hopefully you have a Stock Trader’s Almanac...