One of the things that caught my eye while walking through bookstores; the fact that books on economics, business and markets are usually in the back of the store. By comparison, books on self-help, spirituality, psychology, and astrology seem to be more colorful both in number and in terms of authorship and variety of subject matter.
If you think that after such an introduction, I would attribute the state of the economy and markets to the lack of reading books in Turkey, you are wrong. Being a relatively intensive reader, I can’t remember the last time I bought a book on economics, business and markets at the bookstore. In fact, I admit that I watched this section most out of the corner of my eye. As far as I know, neither the authors nor the titles have changed over the years. Maybe that’s why these books will all become classics in the future!
Ian Mcgilchrist’s latest two-volume book, “The Matter With Things: Our Brains, Our Delusions and the Unmaking of the World”, which is not available in bookstores and will probably not even be translated into Turkish, is a candidate for to be one of the most important books in history. A book like this, in my opinion, is broad and deep enough not to smile in any section, except for economics and business, in a bookstore. In fact, it’s a book that I think will be more useful to you than most economics and business books you’ve read and will ever read, whatever that means.
“The only function of making economic forecasts is to make astrology respectable,” famous economist John Kenneth Galbraith said. As someone who’s had a bit of an interest in astrology, I don’t find that phrase very funny anymore and I say, “If there’s anything to take, it’s astrologers.” An economist who can be described as very versatile for his field says so, but what did JP Morgan, who was the richest and most powerful person in the world at the time, single-handedly prevent the collapse of the market and the economy in the United States? “Millionaires don’t use astrology, but billionaires do.” Doesn’t a similar situation apply to the technical analysis used in market analysis? Although some consider technical analysis to be the infallible laws of nature, those who come from the fundamental side like me generally look down on technical analysis. So what’s the point of this thing? My knowledge of neither astrology nor technical analysis is not very high, but I can answer as follows: It depends on the person. And when I say person, I mean the person who analyzes it and uses it at the same time.
In recent years, what and how much have the books or economics books, which I have bought and read more than economics and business books, and which are in the personal development section, been useful, to whom? Frankly, I don’t know the answer either. So when was the last time you heard the answer “I don’t know” from an expert or an authority?
I think this is where the real problem begins: the conditioning that being successful, living a meaningful and happy life, should always be seen as a form of work. Like it’s good to be busy all the time, time to read or think is bad and something to be ashamed of. Most of the time, you don’t know the answers, but you try to ask the right questions.
However, you don’t always have to know something or even everything. This is what is imposed on us. It’s a shame to say that I don’t know. You must always pursue more. Be a better person, a better colleague; sorry for being a “team” friend, “solution partner”, “stakeholder”, parent. Always work more for everything and on yourself for that matter. So how many people do you know, other than the ones who wrote these books, who still recommend working on themselves like this and have been successful in life or in markets with a narrower definition? Or is it actually better for you and where you work to breathe once in a while, think about where I’m going and do nothing in sight, instead of always working harder and absorbing more like a sponge?
Exercise a profession, work to live well; To work, to be productive, to live to do what is called are different things. I think this is a totally wrong way to struggle with such a narrow view that there should always be more about not the job but the profession or the most important parts of our whole life. Curiously, there is no evidence of mastery in a profession or of enduring financial success, but there are plenty of examples to the contrary.
Well, those who seek “liberation” in personal development or economics and business books in order to have a rich and/or good life in the stock market; Is the number of professionals alienated from themselves and their workplace increasing or decreasing?
They read a lot and studied a lot; Looking from the outside, they are now successful, they have achieved status. So, have these people achieved the promised nirvana while doing everything “right”? Or do they have a hard-to-explain feeling that “something is wrong” somewhere inside them? Are there things that “just don’t fit”, as Hamlet once said? There will always be smart entrepreneurs who will answer this need of those who are always looking for certainty in the markets and I think in life, but these answers are often not sincere and real, they are aimed at temporarily satisfying this hunger of the person .
I can’t say anything about life, but you don’t have such certainty in the markets, you don’t even need it. There are so many things I don’t know the answer to and I can’t know. If you’re in a field close to real competition, you need to find the facts, keep pushing forward, despite the slight embarrassment and anxiety it brings, and without getting caught up in left-brain false certainty. You have to try to ask yourself the right questions, move forward without locking yourself into forms and illusions, and without underestimating the contribution of the right brain. Those of you who have read McGilchrist will better understand what I mean.
If you’re confused, we’re on the right track. Because that’s where the markets come from and you’re ready for the confusion it’s going to create for the next few weeks. We are in a situation where it is very likely to see movements contrary to the real trends in many asset classes and within these classes. In the S&P500 index, which we take as an indicator of global risk assets, we have reached the levels around 4400, where we expect this decline to end, and the reaction of these is more likely to our opinion. Even if this happens, we believe that, as in March, these will be moves against the main trends, but create the perception that “trends have changed” in many people.
Basically, our strategic views haven’t changed and we won’t repeat them, but let’s summarize why we think the likelihood of a reaction has increased: pessimism has become more pervasive, which we think is a positive. To know; positive sentiment, especially for US equities, has taken a serious “U” turn in a relatively short time. Let’s give a few examples without making the mistake of counting one by one and choosing only examples that support our point of view: In the latest Bank of America investor survey, considered important in the sector, investors are more pessimistic than ever about global growth before. The bulls are at record highs in the AAII poll and the sell call ratios are still very low.
However, we will repeat almost exactly the warning we issued during the previous test of the markets. This slight reaction, which should not last more than a few weeks, but which could give the impression that “the risks have passed” among many, should not exceed 4600 in the S&P500 index. Therefore, these reactions will give us the opportunity to take positions in the main trend directions.
In accordance with our expectations expressed in our annual summary reports; developing countries, especially Brazil, performed much better than developed countries. Turkish equities also fared relatively better. We expect this to continue. The early stages of a high and rising inflationary macroeconomic environment with negative real interest rates are often accompanied by strong growth. At this point, we have previously expressed our view that equities should be preferred over fixed income. This round was no exception in that regard. But the bad news is that these dynamics are often unsustainable and often turn into stagflation. In this environment, equities and fixed income securities lose value simultaneously. We are not there yet, but at least it can be useful to mentally prepare for this situation.
What will trigger the next wave of sales? I do not know. But such a depreciation of the Japanese yen against the US dollar in a relatively short period of time will have implications. Unlike financial assets such as stocks, currencies directly affect savings. The level of the Chinese yuan against the yen has also reached the level where China recently devalued. Could there be a devaluation in China? If so, what will be the effect on economies and the reaction of markets?