Dear Investors,
This month’s newsletter will be quite short, mostly because there is not much to say. The newest thing the stock market is worrying about is Turkey’s financial crisis. Should we care about the Turkish Crisis? The answer is an emphatic “no” unless you are Turkish or someone affected by Erdogan’s policies.
[timeless]
Q2 hedge fund letters, conference, scoops etc
Turkey’s economy makes up only about 1% of the global economy. Additionally, the country’s stock market is minuscule. It’s worth only about $178B in US dollars (perhaps somewhere around $250B prior to the crisis). Turkey makes up only .8% of Vanguard’s Emerging Markets fund and only .1% of the total world stock market.
There just really isn’t any reasons for investors to care about Turkey’s stock market or even its economy. It’s just not big enough to matter.
However, when looked at another way I think the Turkish crisis illustrates one of the biggest issues investors face. After experiencing the bursting of the tech stock bubble and then the great recession investors see any new hiccup around the globe as being the cause of the next big stock market drop. I think the biggest threat to investors is extrapolating the past into the present and assuming every negative global event ends with a market crash. What’s more likely is that each global event is much closer to a paper cut to the markets. Sure, the financial crisis in Turkey might shave a few hundredths or thousands of a percent of global growth and Trump’s tariff binge will likely reduce growth by a few tenths of a percent but nothing is worth panicking over.
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Disclaimer
Historical results are not indicative of future performance. Positive returns are not guaranteed. Individual results will vary depending on market conditions and investing may cause capital loss.
The performance data presented prior to 2011:
- Represents a composite of all discretionary equity investments in accounts that have been open for at least one year. Any accounts open for less than one year are excluded from the composite performance shown. From time to time clients have made special requests that SIM hold securities in their account that are not included in SIMs recommended equity portfolio, those investments are excluded from the composite results shown.
- Performance is calculated using a holding period return formula.
- Reflect the deduction of a management fee of 1% of assets per year.
- Reflect the reinvestment of capital gains and dividends.
Performance data presented for 2011 and after:
- Represents the performance of the model portfolio that client accounts are linked too.
- Reflect the deduction of management fees of 1% of assets per year.
- Reflect the reinvestment of capital gains and dividends.
The S&P 500, used for comparison purposes may have a significantly different volatility than the portfolios used for the presentation of SIM’s composite returns.
The publication of this performance data is in no way a solicitation or offer to sell securities or investment advisory services.
Article by Ben Strubel, Strubel Investment Management
