Some Facts and Thoughts on Turkey

Cappadocia

Note to self: Write a separate post for Istanbul.

I am not a patriotic guy nor someone who tries to intentionally belittle his own country and nation in order to present himself as a premium citizen. Patriotism is blind nationalism and serves no purpose at all; while belittling one's nation with a specific aim in mind is sheer stupidity.

By the same token, I am also not proud (also not ashamed) of being a Turkish citizen. I consider any citizenship as a mere title. The only reason I am writing this post is to help non-Turks understand Turkey better by eliminating their prejudices and wiping out wrong ideas.

"Are there many Turks there?"

After my mediocre performance on predicting the latest general election in Turkey (June 2015), I didn't want to fail publicly for a second time. If I were to do a similar analysis, I would indeed be off again by a much larger margin; this is once again due to pollsters' wrong predictions.

Classical Music 101 for the Serious

Wilhelm Furtwängler

A lot of people ask me how to get started listening to classical music. They seem to appreciate the complexity, nobleness and beauty of it, but most of time an instructive roadmap is missing which might be discouraging for some. Most quit before they even start.

I listen to 45% classical, 45% jazz, 10% others (techno, house etc.). When I was a teenager my music taste wasn't diversified like today; it was 99% classical. However I still think I have a good trackrecord introducing people to classical music. Here is some -maybe unusual- advice for newcomers.

Common Wine Flaws

On average 1 out of 20 bottles of wine are flawed and worth sending back. Below are some of the most common wine flaws:

Corked:

Wine is corked when it has been in contact with a cork infected with a fungus that produces 2,4,6-trichloroanisole (TCA). It is a compound that gets into cork and imparts a musty odor in the wine.

Despite what you may have seen in old movies, you’re not going to detect cork taint from sniffing the cork. It also has nothing to do with little pieces of cork that crumble into the wine. You’ll detect it by sniffing the wine and noticing a smell like wet, musty newspapers, wet cardboard, or moldy basement. The palate will taste similar, will lack fruit, and is often quite bitter.

Most Used Tools of HBS and Less-Expensive Alternatives

I am not an HBS MBA nor a faculty member. However I spent a fair amount of time at the Baker Library during my time at Harvard and noticed excessive usage of databases and financial data vendors. Here are some practical observations:

Cost of Living Comparison

I've been so fortunate to live in different cities. One thing people kept and still keep asking me is the cost of living and how it compares in different countries/cities.

Every time I try to formulate my naive "qualitative" response to such comparison questions, most people come up immediately with their own unfounded "uber-quantitative" analysis. 90% of the time bottled water price becomes the ultimate benchmark, which I find quite annoying.

With this post, once and for all I am trying to show how one can easily compare cost of living in different cities.

Je crois entendre encore

Aria from Les pêcheurs de perles by Georges Bizet...

 

Quantitative Prediction for the Turkish General Election 2015

Final opinion polls are published. As of May 28, opinion polls are banned. At this stage of the campaign I wanted to model my quantitative prediction.

This is basically a meta-analysis. The idea is to combine different polls using weighted average. In a normal average, each data point contributes equally to the result. In a weighted average, some data points contribute more than others. I analyze how each polling organization performed in the past and consider (weigh) their latest 2015 predictions according their past performance.

A penny saved is a penny earned

I wanted to find out in which country one can save the most. I couldn't find an accurate study (OECD, WorldBank etc.) on this, so decided to do my own analysis.

Ex post facto: I recently came across "Local purchasing power". It is probably the most helpful (complex) data for this type of analysis. However I still like my calculation for its easiness and clarity.

There are two dominant parameters: salary (what goes in) and the cost living (what goes out).

For the first, using average monthly disposable salary is the best option; simply because it's after-tax. Taken from Numbeo.

There is no easy standard measure for the cost of living. I basically assumed that my monthly expense would be 300 BigMacs / month. BigMac prices are easily available on The Economist's BigMac Index.

I used 2014 data. All prices are in USD.

High Tech Export per Capita

While browsing through WorldBank Data, I found a very good country indicator: High Technology Exports. I have no idea how reliable it is; but it's data and thus should be analyzed.

As Nobel laureate Robert Solow and economist Trevor Swan showed in the 1950s, technological progress is the key to a country’s long-term increase in its material well-being. So, I also think comparing countries by looking at their "High Tech Export per Capita" would be a very good gauge to identify the real superpowers and estimate countries' future performance.

Here is the output of my analysis:

An Insider's Perspective: How can ETH improve its education quality?

I received my Bachelor's degree (Mechanical Engineering) from ETH Zürich. Currently I am working on my Master's thesis at Harvard University. Until now, ETH gave me plenty of constructive feedbacks and made me a better person; now it's my turn to return the favor.

Let me say very directly and upfront that in general I am truly satisfied with the education quality of ETH. It is one of the most challenging things I have ever faced and will remain an unforgettable memory in my life. The following is just my humble opinion on how it can be further improved:

Seafood: The choice is yours

 

Source: The Washington Post

Pack Like a Pro

How money flows through a company

Source: The Five Rules for Successful Stock Investing

Why did Warren Buffett close his investment partnership in 1969?

 

Warren Buffett started his entrepreneurial career as a hedge fund manager. In 1966 he stopped taking outside money and in 1969, he returned money to his customers and closed the partnership. 

Currently his investment platform Berkshire Hathaway is a public traded holding company rather than a hedge fund or PE firm.

In a typical hedge fund, limited partners can withdraw capital quarterly (or even monthly). It's not a problem if a fund makes short-term investments or trades with the similar horizon (i.e, quant funds, arbitrage funds, etc). However, it's a big problem for the funds pursuing long-term investment strategies. Buffett wants to move capital across businesses while not having noisy partners (customers) annoy him all the time when returns don't look as outsized as past performance.

Investment Partnerships 101

 
If you want to co-invest with other people, you need an entity that can combine your capitals. Depending on what this entity invests into, and who is allowed to join it, various types of investment partnerships are possible.

Hedge Fund: 
An investment partnership restricted to "sophisticated investors" - people who have enough experience to protect themselves. Hedge Funds are not allowed to accept capital from general public (investors need to be accredited); in exchange, they don't have restrictions on what they can invest into. The professional fund manager is then compensated with a share of the money for his/her time and efforts.

Mutual Fund:
They invest in publicly traded securities (stocks & bonds), and anyone is allowed to join. To protect general public investors, Mutual Funds are heavily regulated and restricted in what they can invest into. Mutual fund managers receive a fixed fee.

Private Equity Firms:
Private equity firms characteristically make longer-hold investments in target industry sectors or specific investment areas where they have expertise. Private equity firms and investment funds should not be confused with hedge fund firms which typically make shorter-term investments in securities and other more liquid assets within an industry sector but with less direct influence or control over the operations of a specific company. Where private equity firms take on operational roles to manage risks and achieve growth through long term investments, hedge funds more frequently act as short term traders of securities betting on both the up and down sides of a business or industry sector's financial health. 

Private equiteers attempt to buy companies at low EBIT multiples with high leverage and make their money increasing operational efficiency and maintaining highly disciplined capital management. Their preferred holding period is dependent on returns but generally not more than 5 years and usually less.

One example in Turkey is Turkven.

also there are some others...

Bonus: 2 and 20 Fee Structure

The 2 and 20 fee structure is the way that most private equity firms (incl. hedge funds) are compensated. More specifically, this phrase refers to how hedge fund managers charge a flat 2% of total asset value as a management fee and an additional 20% of any profits earned.

Considering that some of the top performing hedge funds earn upwards of 50% returns per year and that a given manager can manage billions of dollars worth of assets, this type of fee structure can be very lucrative for managers who consistently earn high returns.