Lessons from the best-performing stock market this year

Turkey’s stock market sits on top so far this year. From December 31, 2021 through September 14, 2022, Turkey’s Borsa …

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Happy male couple looking at a laptop screen together

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Turkey’s stock market sits on top so far this year. From December 31, 2021 through September 14, 2022, Turkey’s Borsa Istanbul was up more than 85%. Compare that to a lacklustre -1.5% for the UK, -7% for Canada, -9% for Australia, and the downright dismal -17% in the U.S.

The increase in Turkey’s stock market has been underpinned by a 7.6% increase in GDP year-over-year for the second quarter.

Ready to invest?

Maybe not. Unemployment in Turkey sits at 10.6%, double or triple that of most developed-world economies. Consumer prices have soared more than 80% over the past year. And the country is pinned under the dictatorial control of Recep Tayyip Erdoğan, who, at a bare minimum, has some extremely misguided economic ideas.

Indeed, Erdoğan demonstrates some of the worst qualities of a leader, be it the head of a country, or the CEO of a company.

Notably, he’s…

Often treated the country as his personal piggy bank. Rather than a servant of the state, Erdoğan seems to see the situation, at least at times, the other way around. This includes the construction of the Presidential Complex in Turkey, a 1,100-room palace that, depending on the estimate you go with, cost anywhere from US$350 million to US$1.2 billion. When the building was unveiled, The Washington Post wrote that “The White House would be a tiny wing”.

Making big bets on ideas that are ludicrous. The raging inflation in Turkey has been stoked by the highly-misguided idea from the President that lower interest rates, rather than higher, would be best to fight rising prices. Economic orthodoxy is the opposite. When interest rates are increased, it slows the flow of money and dampens economic activity, putting pressure on rising prices. And while there are good reasons to doubt some areas of economic orthodoxy, this is not one of them. Erdoğan’s oddball idea has taken containable inflation in the country and turned it into a major problem.

Doubling down, rather than admitting an error. Most everyone with even a basic understanding of economics felt Erdoğan’s approach was wrong-headed before day 1. But with inflation closing fast on triple digits, the mistake should now be fairly obvious. Instead of changing course, though, he introduced a policy that would backstop Turkish depositors, and therefore the currency, via the country’s treasury. This continued the misguided economic approach, while additionally shifting risk onto the Turkish taxpayer.

And still, the Turkish stock market is the best performing major market this year.

This isn’t an anomaly. There are many instances where inadvisable actions lead to positive results. Lotteries are mostly ways to set your money on fire. But somebody wins. Drunk driving is among the dumbest things a person can do. Yet intoxicated drivers do make it home without injury to themselves or others. And smoking and eating mostly red meat is not the ticket to good health. Yet there are lifelong smokers who eat steak at every breakfast who live to a ripe old age.

You don’t have to take wise actions to get to a good outcome. That’s how statistics work. Unless something is an absolute law of physics, there will be a range of outcomes. “Bad” actions can end up with “good” outcomes. And vice versa.

But if you want to reach ideal ends more often than not, focus on process: consistently take the actions that are most likely to lead to the outcome you want.

If you want to keep more of your money, don’t play the lotto. You can get to your ends of increasing wealth much more reliably by doing boring things like saving money.

If you want to stay alive and out of jail, don’t drive drunk. With just a little planning and coordination, you can have the fun you want without endangering anyone.

If you want to live long, don’t smoke and eat a well-balanced diet. Strike a balance in your diet and you may find that you enjoy your occasional steak even more. (The smoking I’d suggest simply avoiding).

If you want to be a successful investor, diversify and invest for the long term. Don’t put all of your money into one stock in hopes that it’ll make you rich in 12 months. Investing that verges on gambling may lead to the occasional win, and a good cocktail-party story to tell. But it’s a low-probability path to growing your portfolio.

And whatever you do, don’t expect economic success from the leader who hasn’t grasped Econ 101.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

pensive bearded business man sitting on chair looking out of the window
Investing Articles

The Dr. Martens share price just crashed 25%! Time to buy?

The Dr. Martens share price has plummeted. Is this an opportunity for our writer to add the stock to his…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

Dr. Martens: is this collapsing FTSE 250 stock now a contrarian buy?

Shares of this well-known FTSE 250 firm just dropped to a record low following a poorly received report. Is this…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Why I’d start putting money into dirt cheap UK shares this December

Our writer isn't waiting until the New Year to consider opportunities for his share portfolio. Here are some reasons why…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

What are the best shares to buy in December for 2024?

Christopher Ruane explains why he's not waiting until 2024 to make moves in the stock market and would be happy…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

£5k of savings? I’d target income of £7,544 a year by investing in just 3 dividend shares

I'm building a portfolio of dividend shares to give me a passive income in retirement. It's astonishing how the rewards…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

One dividend giant I’d buy over Aviva shares

Aviva shares still look a good buy to me, but I think right now another high-yielding dividend stock looks even…

Read more »

Newspaper and direction sign with investment options
Investing Articles

I would grab these cheap shares before prices rise again

With the UK market in a slump, this Fool UK contributor is looking at buying up some cheap shares before…

Read more »

Girl buying groceries in the supermarket with her father.
Investing Articles

Down 55% since 2007, can the Tesco share price turn around?

The Tesco share price has fallen by more than half in recent decades. Our writer explains whether the stock has…

Read more »