Should You Buy Stocks When Their Price is Decreasing and Their Dividend Yield is Increasing?

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It’s a great uh and very hectic time to  decide whether tests whether or not in west   you are one of the well-known strategists in  turkey because you are with us please tell me   the way that you are thinking about investment  what is the main theme meaning should they sell   their stock holdings because they’re worried about  a bear market and recession around the corner or   because most of the uncertainty has already been  factored into stock prices that now is the time to   be buying i still think that there are challenges  ahead as it relates to the geopolitical situation   in ukraine as well as what the fed is likely to do  at its mid-march meeting so one thing is certain   and that is that volatility will remain elevated  okay uh as long as the politics is concerned what   is the next episode of uh this political problem i  mean for example if uh china uh decides to invade   taiwan or something like that or the this is just  uh story uh just uh speculated by the markets   it is markets because china has mentioned that it  does feel that taiwan is a part of mainland china   um and so because of the uh situation in ukraine  uh the the worry is that that could give china an   increased reason to invade taiwan um at this point  we don’t think that that is a likelihood but it   is a situation that has increased in probability  since the russian invasion of ukraine also we see   that north korea has sent up several more uh test  rockets so we just find that there is an awful   lot of uncertainty from a geopolitical perspective  around the globe okay one or another i think there   will be more volatility in terms of geographical  uh problems the other one is the policy making or   the uh interest rate decisions of the mpc uh what  what are you uh expecting to see from the fed side   well i expect to see a one quarter of one percent  rate increase so a 25 basis point rate hike when   they meet in the middle of march um we have  had five rate tightening cycles since 1990 and   every one of them has started with a 25 basis  point increase the fed likes to start slowly   they tend to then increase rates by 25 basis  points at the second meeting third meeting and   it’s usually at the fourth meeting or so that if  they feel they need to speed things up then they   raise rates by 50 or 75 basis points so our  belief is that they will have three 25 basis   point increases by mid-year and then possibly two  more by the end of this year so five in total but   we don’t see a 50 basis point hike initially  and we don’t think that they will need to go   seven this year as some strategists are calling  for okay as far as i know uh errors like uh those   inflation expectations are writing it’s not bad  for the stock market as far as i know but on the   other hand there is the liquidity which will  be i mean raccoon by the fed on the other side   what is going to be the impact as long as  the uh global stock markets are concerned   do you expect to see a decapitalization uh  between uh developed markets or developing markets   well i think first off that’s multiple part  question but in terms of inflation that is   certainly a concern for investor today for cpi uh  we’re only going to be getting the february data   uh this coming week in which we likely to see  seven point eight percent year on year increase   but that will come up to an  8.0 percent year-on-year rise   with the march data so that is a concern  because there is a direct correlation between   inflation and interest rates if you take a look at  the 1970s we started that decade at a 5.4 percent   year-on-year rise in inflation and ended the  decade at 12.4 and for that whole 10-year period   we only posted a compound annual growth rate  of one and a half percent for the s p 500. so   higher inflation leads to higher interest rates  which then leads to lower stock prices in terms   of what might be more adversely affected uh our  belief is that we probably will see more pressure   from the emerging market side than we will  on the develop side at least as it relates to   interest rates our expectation is from a a global  gdp perspective that emerging countries could see   about a 4.4 percent gdp rise in 2022 but that’s  down sharply from the 6.4 rise that we saw in 2021   what about china how is china economies performing  chinese economy is doing very well uh up 8.1   in 2021 and expected to be up four and  a half percent in 2022 so it’s still   one of the stronger economies out there and  recently china had indicated that its goal   is for a five and a half percent increase in  gdp this year so still china is a strong economy   but certainly not as strong as it has been in  past many years what about the us because i’m   asking this question because most of the people  think that the real conflict is not just between   uh us and russia or u.s uh ukraine between  russia but uh you know uh one of the biggest uh   challenging economy i mean the telling the u.s  economy is china at the same time how is u.s   performing and what is going to be the impact of  this kind of i mean uh geographical problems uh   over uh u.s economy china economy and of course  the uh global economy well we have certainly   seen a reduction in earning in expectations for  the global economy at the beginning of the year   it was expected that we would see a five  and a half percent rise uh in gdp uh in 2022   now that number is closer to 4.1 percent uh so  certainly expectations are for weaker economic   growth across the globe um the biggest declines  are likely to occur in the advanced economies we   were likely to see about a 4.3 percent gain now  looking for 3.7 i think that the real worry that   investors have around the globe is will the  us be losing its military might if you will   or its uh geopolitical standings if we don’t in  a sense stand up to the bullies around the world   uh does that mean that we lose our stature uh  in terms of defending uh our nato alliances so   i i think that uh the us is is obviously  playing it very carefully because   we are dealing with two superpowers with nuclear  capabilities so trying to assist the ukrainians   uh through pretty creative measures uh financially  in particular uh but also by sending uh migs   from poland to ukraine in order to  fight the russians on their own so   it looks as if the longer that the ukrainians  can hold out uh and because of the impressive um   uniform response by the western world i think  that has caused people to feel a little bit better   about how the us can lead such a  coalition okay um turkey is one of the   most important ally i don’t know if it still saw  like that but uh um correct me if i’m wrong but   uh your ex uh president trump uh said uh uh  sending uh clear message with or without me   i think it’s still uh on the uh desk that it’s  clear that you you should have to decide whether   you are with the nato nato allies or without them  uh do you think that turkey might be or loser   or winner uh in terms of investment because you  know uh if uh nato or us want to send a clear   message to the bullies it means that you have to  be with the your allies and uh one of the uh most   suffered i mean country is turkey in terms of  trees them in terms of uh fx market in terms of   energy prices in terms of grain i mean uh buying  from abroad do you think that this kind of i mean   uh problem has a very very different meaning for  turkey or the investment in turkey well i think   that certainly you cannot uh look toward the  prior president you have to look exclusively   at the current president the current  administration and the current policies   and i think that not being a political expert that  the us’s stance is one of embrace uh accepting   uh the members who want to work with the united  states but i don’t think it is a binary situation   where you’re either with us or you’re against us  uh i think the us is simply trying to put together   a coalition to help stave off the russian  invasion of uh ukraine um but i think that we   all realize how important uh the trading partners  are around the globe and we would rather have that   uh continue and actually increase rather than  trying to set up walls between ourselves and   other trading nations okay as the last question  uh what i understand is that it’s going to have   uh some more time to settle down this kind of uh  i mean conflicts between countries russia ukraine   china and others uh but on the other hand the  turk uh all the global economy will suffer   uh i mean growth rate will diminish uh and  inflation is going to be still high.

What do you recommend your investors to invest in order to keep their savings against the inflation?

Well, the first thing that they should do is to protect their portfolios from their own emotions, because it’s usually the worst time when investors feel the most panic that over the long term the best investment out there to beat both inflation and taxes is stocks so typically you know you’re better off looking for reasons to buy stocks at depressed   prices than you are to sell your stocks at these depressed prices especially if you happen   to be somebody who’s approaching retirement. You want to be focusing on those companies   that now are offering a very attractive  dividend yield because of the lower prices. Think like a landlord not like a trader, focus  on dividend yields as if they were tenants within your rental apartments, look for  those that consistently pay a good dividend   and have no problem with annual increases so like a tenant to make sure that they continue to pay and they don’t want to leave should you want to raise their rent; so same goes for the stock prices. Look for those that represent a good opportunity now that prices have come down so much.

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