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...

Example Of Diversification

Not all emerging markets are the same. Some are commodity based, some export technology or sneakers, some are in their own world and so on. If you want emerging market exposure that goes beyond owning one broad-based ETF or OEF you need to be cognizant of the differences and similarities of the countries you own. If all you owned in 1997 were SE Asian countries you got hit very hard, relative to the wide spread emerging market pain that went with the Asian contagion. If you only owned current account deficit countries during the risk aversion correction you got hit harder than some other folks. If all you own now is Brazil and Russia you will get crushed if commodities ever endure a serious correction. The chart above compares the Turkish market with iShares Malaysia (EWM). Regardless of what you think of either country’s investment merit the fact is both countries are driven by different things and have much different economies. Turkey has big deficits all over the place, Malaysia is one of the surplus countries. Turkey has a lot of inflation and very high (high-teens) short term rates, Malaysia’s rates (last I looked) are lower than ours with very little inflation. If you like Turkey it is because you buy into their potential role in the EU (fraught with open ended questions), their very young and large population, the pipeline and a few other lesser things. If you like Malaysia it is because they are less volatile than a lot of emerging markets, have a well managed economy, you see continuing export growth and you probably have something...

Example Of Diversification

Not all emerging markets are the same. Some are commodity based, some export technology or sneakers, some are in their own world and so on. If you want emerging market exposure that goes beyond owning one broad-based ETF or OEF you need to be cognizant of the differences and similarities of the countries you own. If all you owned in 1997 were SE Asian countries you got hit very hard, relative to the wide spread emerging market pain that went with the Asian contagion. If you only owned current account deficit countries during the risk aversion correction you got hit harder than some other folks. If all you own now is Brazil and Russia you will get crushed if commodities ever endure a serious correction. The chart above compares the Turkish market with iShares Malaysia (EWM). Regardless of what you think of either country’s investment merit the fact is both countries are driven by different things and have much different economies. Turkey has big deficits all over the place, Malaysia is one of the surplus countries. Turkey has a lot of inflation and very high (high-teens) short term rates, Malaysia’s rates (last I looked) are lower than ours with very little inflation. If you like Turkey it is because you buy into their potential role in the EU (fraught with open ended questions), their very young and large population, the pipeline and a few other lesser things. If you like Malaysia it is because they are less volatile than a lot of emerging markets, have a well managed economy, you see continuing export growth and you probably have something...

Friday Tidbits

China had a 3.68% decline on Friday. Big congratulations for Andy Swan and the Daytrade Team. Barclays listed eight domestic bond ETFs yesterday but more importantly Barclays’ ETF guy says that foreign bond ETFs are on their radar. If/when they actually do this I think it will open the gates for a huge step up in innovation. A couple of weeks ago I started subscribing, if that is the right word, to a service from Inveslogic that emails me a bunch of blog and other content. I know that many sites do this including Seeking Alpha and I am sure theirs is good too but I am impressed the Inveslogic and get a lot of utility from it. Jyske Bank (pronounced Yee-Ska) thinks the decline in oil is good news for Turkey. I have an article that should post today on either RealMoney or TSCM about opening an HSA account through Options Express to be able to trade stocks or mutual funds. We had our account at Bank of America that just started offering mutual fund but when I went to place an OEF trade the site did not work. BTW I checked with Ameritrade based on an old reader comment and was told they don’t have HSAs anymore. Adam Warner has a post here and here about naked puts. I am a fan of the strategy when done in moderation. Just a few trades a year can add more than a few basis points to the overall portfolio. You gotta look at this chart from Barry Ritholtz. We have no snow yet from this current storm that is...

Friday Tidbits

China had a 3.68% decline on Friday. Big congratulations for Andy Swan and the Daytrade Team. Barclays listed eight domestic bond ETFs yesterday but more importantly Barclays’ ETF guy says that foreign bond ETFs are on their radar. If/when they actually do this I think it will open the gates for a huge step up in innovation. A couple of weeks ago I started subscribing, if that is the right word, to a service from Inveslogic that emails me a bunch of blog and other content. I know that many sites do this including Seeking Alpha and I am sure theirs is good too but I am impressed the Inveslogic and get a lot of utility from it. Jyske Bank (pronounced Yee-Ska) thinks the decline in oil is good news for Turkey. I have an article that should post today on either RealMoney or TSCM about opening an HSA account through Options Express to be able to trade stocks or mutual funds. We had our account at Bank of America that just started offering mutual fund but when I went to place an OEF trade the site did not work. BTW I checked with Ameritrade based on an old reader comment and was told they don’t have HSAs anymore. Adam Warner has a post here and here about naked puts. I am a fan of the strategy when done in moderation. Just a few trades a year can add more than a few basis points to the overall portfolio. You gotta look at this chart from Barry Ritholtz. We have no snow yet from this current storm that is...