They said

For all of those who follow me on EStaloteSAssets, Twitter or LinkedIn, what is happening in the financial markets has not surprised them at all. I was very skeptical to many managers, institutions and of course catastrophic policies that today still go on. Many criticized me for the skepticism, but in the end, as usual, history and time have justified my comments with solid facts.

A recession is almost inevitable, this means hard times and unfortunately as I said in previous articles, populism will stay for a while. Many people will still support these damaging “policies” due to desperation, but we should not fall into their game, we must keep it cool. It is very difficult to anticipate a recession because statistical data always tends to be late.

Now is not the  time to panic. It is the best time to invest your savings as well as to do business. Remember that the great fortunes are built on these scenarios, so keep fighting. Some corporate bankruptcies will be due to financial excesses and bad management (there are also fraudulent cases very difficult to detect). As I warned you before, and I will do it one more time, I did bet AGAINST the market but I DO NOT advise you to do it at these levels because world leaders are going to meet in order to "solve this crisis". With the help of central banks, they will try to pull their shit together and put their differences aside (hopefully).

Every crisis is the same, and this time the trigger was a pandemic, so let me be clear if you did not bet against the market 4 months ago, please do not do it now that the world powers are working together, that would be stupid, so move on. This market will recover at these prices because right now there are so many great shares at great value. I think many of you are very pesimistic right now, but now it is time to be optimistic. I am happy that I got it right with my predictions about the market but I am not happy with what is going to happen in the coming months, because the market will recover slowly, but many people are going to suffer from the incompetence of certain people.

Be careful with “fake investors”, people dedicated mainly to scam other people providing investment courses. There are also funds that use Value Investing as a marketing tool to attract clients. I will not give names, you can play detective yourself and investigate them. One of the first things that you have to do now is to silence on your phone those wonderful analysts who have recommended you to buy that stock and bond… yes, you know who I am talking about, don’t fool yourself (we all make mistakes, but some make the same mistake systematically). Avoid the analysts who told you that the market was and is living a simple correction (even when Standard and Poor's 500 was at 3,300 points and a price earnings ratio above 26), avoid them because they said “just a correction” they continued “buy the dip” without any good explanation. You must block them, NOT because of that, but because they will mostly distract you when you need to be focused and the right time comes. Many of them now say "time to get out of the market". Do not do it now! Why are they going to be right this time? Now is the time to BUY, so stay focused!

It is worth to remember that bear markets do not last too long and that bull markets are not forever. Forget the excuses like "there is nowhere to invest in a bear market". It is very easy to invest when things look good, but now that things are not looking so good many “investors”, who earned money on the stock market without having studied a single stock (bonds, commodities, CFDs etc) previously, now realize that investing is not like playing Russian roulette. God bless the economic cycles, which do not stop teaching us important lessons that will later be forgotten again by millions of people. Allow me to repeat myself, patience is necessary and the market rewards it.

Timing is one of the most important things when investing, as well as patience, determination and analytical skills. As investors we must remember, stocks that are cheap today may end up being overvalued in the future, just like the stocks that are expensive now can become undervalued later. For example, four industries that have not performed particularly well in recent years and have depreciated; automotive sector (which I warned in early 2018), mining sector, airlines and energy are now much more attractive and a good opportunity to invest long-term (as long as you know how to choose companies with good fundamentals). But as always, this is NOT buying advice, it is just my opinion and what I do with my savings, which by the way, I have done very well until now, as people who have followed me for years can see.

Many of you also tell me that you do not have the time to analyze companies or investigate funds, I would suggest an ETF or a fund index focused for example in the  S&P500 (Differences between ETF & Fund Index https://investor.vanguard.com/etf/etf-vs-mutual-fund ), Fidelity, Vanguard and Amundi are pretty good (really nice prices). For more information you can visit their official pages, but there is a wide range to choose from. The stock market is one of the best choices to optimize long-term savings, as long as you do NOT need that money in the near future. I believe that the stock market is a better choice than the bond market (unless you are a very good bond trader specialized in companies in complicated situations and in risk of default), but it is just an example and there are many more.

For a real value investor there is nothing more beautiful than these discounts all over the stock market and finding more and more pearls that will provide us with very interesting returns. I have no words to describe this feeling.

I will not talk about debt and central banks balance sheets because I am just tired of it and you all know my point of view. I will not be sharing any more articles publically for a while (I will do only private work), but if you want to contact me you know how to do it. Good luck!

The importance of the emerging markets

The moment for emerging markets has arrived, as I quoted in my article ''A little bit of everything''. We should not be surprised when we read the press in the morning and on the cover of the newspaper it appears that the currency of an emerging country plunges to historical low levels. Do not take it as a breaking new please, because it is a situation that is going to continue for a long period of time and it is something that I can assure with certainty since the European Central Bank has not yet begun to normalize its monetary policy (those who read me often already know that I disagree with extending the QE to where the ECB has done it).

Countries like Argentina and Turkey will continue to suffer, and I am afraid that the measures proposed by Turkish Treasury and Finance Minister Berat Albayrak in İstanbul, August 10, 2018 will NOT be enough to recover the Turkish economy and the confidence of the financial markets. Because the problem of the Turkish economy is not external, as some say, the problem of the Turkish economy, as in Argentina or Brazil, is INTERNAL. Many of these emerging countries are not doing their homework and the solution to their problems lies WITHIN these countries.

We can not wait for someone from outside to tell us how we have to organize our house, but in the last case that may be our only solution if we want to get out of this chaos. Let’s see how it works between Argentina and the International Monetary Fund. However, the real solution lies in generating internal economic stimulus, but why economic stimulus?

Emerging markets have always served as refuge for investors in times when interest rates are very low or even negative in developed markets (like in the last financial crisis). This is due to the fact that in emerging markets investors are able to extract juicy profits that in more developed markets would not be able to have due to low rates. So what happens is that when interest rates rise again in developed markets, investors again have incentives to repatriate capital to developed markets.

What is happening now in emerging markets is a flight of capital that is not being ordered due to political and financial instability. That is why I said earlier that what emerging markets such as Turkey or Argentina need is to create incentives to stop the flight of capital. They need stability in order to recover market confidence.

However, nowadays they do not have the necessary conditions to compete against the more developed ones such as the American economy where interest rates are finally beginning to be normalized by the Fed. The first symptoms of crisis in the Turkish economy: deficit by current account and, of course, and excess of indebtedness with foreign currencies (in this case Dollars and Euros). We must be aware that so far this year the Turkish lira has already depreciated more than 70% against the Euro and I do not think the currency will stop depreciating there unless the previously mentioned problems are solved. By the way, better not to dedicate this article to talk about the countries that are more exposed to this debt (Spain, Italy or France).

Do not laugh when I tell you that Turkey's credit bubble may pop sooner than expected, so I encourage you to look if you do not believe me, take the data and have a quick look. Later I invite you to take a tour around Turkey and open your eyes, visit buildings, see the immense amount of houses that are being built, ask for prices, think about how many of those average people are going to be able to pay for their house within the established deadlines in these economic conditions and finally, ~you~ value the situation yourselves. It is about the simple law of supply and demand my friends.

Everything is going to depend on the geopolitical direction of emerging markets. In this case Turkey is a strategic country for Europe, but in recent years relations have been deteriorated because of what we all know. It has never happened that a NATO country goes bankrupt (and no Greece did not bankrupt in the end because the EU was there...), and I sincerely think that this will not happen to Turkey. What I'm trying to say is that Turkey must decide which direction wants to take, west or east. Turkey is not Argentina, the Turkish economy has enough potential to face the crisis, but what the country does not have right now is political will.

As a wise man said:

‘’Our aim is not to die. It is to carry out the revolution, to make a reality of our ideas. We must live, to get them accepted by the people’’ – Mustafa Kemal Atatürk

Many thought that in the meeting of the Fed in Jackson Hole, the president Jerome Powell was going to stop normalizing monetary policy to bailout bad investments in emerging markets. But of course NO, the American economy needs to continue raising rates so as not to jeopardize its own stability in the case of a new crisis, since macro data supports rate increase.

So imagine what could happen in emerging markets when the Fed and the ECB begin to normalize their policies together. I assure you that things are going to get a lot worse before they get better, but there are still many investment opportunities in emerging markets, especially in Turkey. You just need to be careful, know how to analyze the data and ask the right questions.