First of all, I would like to wish all business partners and their families good health and confidence in these uncertain days.


When I visited the 50th World Economic Forum in Switzerland in January of this year, the all-important topic was the change in our climate and how to address the urgent climatic and ecological challenges that are damaging our ecology and economy. At this point in time, I warned of the impending stagnation of the economy around the world.


Now 11 months later we are facing a completely new situation: Covid 19 has completely changed our world. For the second time we have a shutdown with massive cuts in our lives and many borders are closed again. The opportunities to travel are still limited. The economy has been largely idle for weeks around the world. The forecasts now look correspondingly devastating. Some optimistic contemporaries only expect a slight cooling. I see it completely differently. The corona virus will burden the economy worldwide like no other crisis in modern times. I fear it could turn into a bigger and longer lasting recession because once the pandemic goes away, the cause will not be fixed. Consumer behavior will be characterized by insecurity and insecure people do not spend money. It will also behave in the same way in the economy, in uncertain times no new investments will be made. The billions in aid will drain away to service liabilities at the banks and oligopolies will form as a result.


The effects of the current Corona crisis will continue to mean that loan repayment or regular interest and repayment payments cannot be made, or only to a limited extent. As a result, banks will no longer lend each other loans and the central bank, the all-purpose weapon used in all crises, will no longer function. As early as October 2019, there was a lack of liquidity on the US money market, which was caused by the fact that the banks no longer granted each other short-term loans to compensate for fluctuations. We last had this effect during the financial crisis in 2008, when the global banking system almost collapsed. This is exactly what we have again now, because there is no other explanation for the banks’ distrust of one another and the associated refusal to grant each other loans. Apparently, the bank managers know more than we can learn from the media.


Another worrying fact is that the EU is not pursuing a common strategy either. Because right now the European Union should have demonstrated its usefulness, and the individual states should have stood by each other.


We shouldn’t be blinded by the current equity rally either. The turning point will come. Investors should be prepared for more surprises as the coronavirus risk persists. In this environment, only investors with a research process that is based on in-depth industry and company knowledge will benefit.


Investing in the midst of the COVID-19 crisis requires the ability to look beyond 2020 and develop long-term cash flow projections that reflect a highly uncertain environment. Sectors and industries will be redefined when weaker companies fail and stronger companies flourish.


But you shouldn’t be put off, because the economy will recover again after this crisis and we want to look to the coming new year with confidence. Let us take the opportunity of slowing down everyday life to spend the time in our homes with our families that we usually cannot see that much. Let’s all enjoy the coming holidays and the New Year together. Hoping that the new year will be a better one, I wish you all good health and a prosperous 2021.


Best Regards,

Murat Karabay

December 2020, Washington D.C.