Global Macro Trading Journal

[Daal]

A while back I heard about this great theory that explains the 'fake news' phenomena. The rise of Google and Facebook (and other social media) and the giant amount of ad revenue they generate has really hurt businessnes like magazines, TV, newspapers. As a result, they had to start to distort, exaggerate, put things out of context, sensationalize things in order to get people's attention. Who is going to turn on their TV or read a newspaper when they got more interesting things to see on Youtube or Instagram? This lead to the rise of fake news, as a result, these days if you want to know what is real, what is going on, its hard to do it through news outlets. They distort things to a point that its hard to get a complete picture by reading the news.

This TSLA thing, there was a great example the other day
"After Musk’s Twitter claim on Monday that “investor support is confirmed”to take Tesla private, the California State Teachers’ Retirement System, which owns about 213,000 shares as one of the largest institutional investors in Tesla, said it had not been contacted by Musk or the firm before the announcement.". CALPERS wouldn't even quality as a 1% holder (for that, you need over 1.5M shares of TSLA) but somehow it was brought as 'evidence' for what the article was arguing

It seems to me that now more than even one should rely on relationships with other great investors/traders and less and less on 'information' one gets from news sites in order to get a complete picture about something, because the amount of distortion from the internet is so large. It wouldn't even surprise me to know that articles do 'lawyer' shopping. That is, if they want to claim some illegality happened, they will keep calling lawyers until one says its a violation of the law what happened. They will ignore the ones that didnt say that. All in the name of producing the biased piece that will get folks to stop their youtube video and read an article. And the rise of fake news seems to make the Mr Market bipolar disorder worse, at least in some instances. Its quite sad really

 

[Daal]

With this Turkey situation, it appears the the correct paralels are Argentina in 2002 and Thailand in 1997. In Thailand, foreign investors lost almost all of their capital between the collapse in the stock market and the Baht

Looking at the drop from 1400 to 200, thats a -85% decline

With the Baht halving, that total loss to foreign investors was almost everything. But the currency and the stock market didnt bottom at the same time so that not completely accurate. In any event, it was a huge loss

And with Argentina

If one considers 450 as the level pre-crisis, the drop was -55%

And the currency dropped -74%.
So the total loss seems to have been -85%

If one considers TUR at $45 the 'peak' (that is, the price before the crisis stimuli) at $19, the drop was -57.7%. So it could be a little early to get involved on the long side but its tough because its only a 2 sample size and Turkey seem to have been triggered by something so silly (which raises the question of what will happen if the priest arrest is reversed). In any event, its a situation to keep monitoring

 

[Daal]

Malasya

South Korea

 

[Daal]

So it seems that the avg loss to foreign holders of stocks in these countries was somewhere around -83%. The currency drop I didnt calculate as peak to through but rather as pre-crisis to `stabilized` value after the shock.
Turkey is at -57% for the total loss to foreign investors so far ($45 on TUR down to $19 at the bottom). The avg currency drop from the group was around 50%, roughly what the Lira has dropped. But valuations probably are also a factor, Im sure Asian stocks were all the rage before they thumbled, so they had more room to fall whereas Turkish stocks were a bit cheaper. (I do recall Buffett buying Korean stocks in early 2000s because they were uber cheap, maybe thats why they lost less)
If Turkey suffers another big panic, its probably a buy

 

[Daal]

In terms of valuation, Turkey is looking quite decent

I should have probably started already to buy at $19 but I missed it. Thankfully, glancing at the Asian charts, it seems that a retest and even break of the lows was quite common, so I might take advantage of something like that to buy some TUR

 

[Daal]

The risk is the dictator going ape shit and just going full Chavez, Putin or Castro. So I might have to read up more on him. It seems that he is a power hungry dude but he still lets capitalism work to some extent

 

[Daal]

Also, glancing at the charts it seems that these countries had 2 trades in them. The big technical bounce after the crisis (with returns of 100% from the lows or so) and then stagnation/range until the 2003-2007 EM bull market. If I play this it will be for the first type of trade, the `repricing`. After the repricing, I rather own an EM ETF rather than a single country. Brazil had a repricing in 2016 to 2017 where the Bovespa went from 39,000 to 70,000-75,000, after that the risks to longs increase and EM ETFs were an attractive competing asset. So if I play TUR, it will be buying in big red days in a panic to sell into the repricing euphoria, I probably wouldn`t chase an up day like today in my buys unless there is some very special news. In my mind, this `repricing` strategy needs good entries (panic days) and good exits (a significant % move from the lows and panic subsiding, with sales into strength) to be worth trading

 

[rocketman987]

BS

 

[Daal]

BS

lol, what exactly?

 

[Daal]

Very interesting this news that Constelation Brands injected $4B in cash into CGC (The old TWMJF). Effectively now CGC has become a Marijuana VC. They are located in Cananda where MJ will be legal in October but they are also close to the US where more and more states are going legal. They also have a presence in Europe and I bet the rest of the world will flirt and go ahead with the idea of legalization as lots of countries simply copy whatever the US does (My country is certaintly like that).

Effectively, this could be an like an early stage Phillip Morris (yes, I know, MJ is not as addictive). But its one of those where if the bull theory plays out, the payoff is large, if it doesnt, the loss is limited. Lots of investors are scared away by articles talking about how overvalued CGC is, but that is only because people are looking at right now (GAAP numbers and other nonsense). Which could mean the stock is still underpriced versus the payoff matrix. They are missing that this is like a MJ Opportunist Holding co that will be trying to develop and invest in operations in a new sector that is bound grow a lot in the coming years. They could also be acquired by Constallation at some point in the future. I day and swing trade this stock regularly but I'm considering taking an investing position in this company