How to Recognize the Peak of the Market – Week 4


Prime Minister Erdogan of Turkey believes he is the next Caliphate of the Muslim world. He has been busy over the last several years, consolidating his power by a combination of persecuting his opponents and buying votes funded by massive debt.

This year, the International Monetary Fund (IMF) warned that Turkey’s rate of growth was so high as to be unsustainable. In the month of April:

  1. Standard and Poor’s downgraded Turkey’s debt to BB- which is a junk bond rating;
  2. The manufacturing index was less than 50, which means that the manufacturing sector of their economy is contracting;
  3. It was announced that inflation in April hit 10.8%;
  4. The Turkey currency in the first week of May dropped 5% (remarkable for a one year change, much less a one week change);
  5. The current account deficit hit 5.5% of the GDP trade.

This illustrates the difficulty of a country fueling its growth with debt to the point of it being out of control, now being impacted by the Federal Reserve raising interest rates and reducing global liquidity.

It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is land.