You might find this interesting…
I don’t know if you know this, but I actually come from a Greek heritage/background. Proud to be Greek, but thanking my lucky stars that my parents moved to Australia.
So with the Greek/Euro drama that’s going on at the moment, I’m interested in it on many different levels.
Spiritually, emotionally and financially.
You’re probably not interested in the first two, maybe on another occasion I can talk to you about them.
You’re probably more interested in how you can make money out of all these shenanigans.
I don’t know whether you know, but the Greek Stock Market is down 93%.
Yes that’s right, 93%.
Would you be brave enough to invest in a market that is being smashed? Probably not.
But a lot of money has been made in the last 3 or 4 days with people who know how to play the contrarian game and make a killing.
Last Thursday, in the office we were talking about exactly this scenario. I showed a few people a chart of the National Bank of Greece (Fallen from $60 to $1.20) and the Bank of Cyprus (A high of $8 to $0.24).
They were shocked… Oblivious to the carnage.
Imagine the Commonwealth Bank going from $50 to $1. This is how crazy markets can be, especially in a crisis… and how bad it is for the Greeks.
Now, being a Greek and a student of money matters, I knew a couple of things… That the Greeks would vote to stay in the Euro and consequently vote for the new Democracy Party.
The alternative being a return to the Dracma, a catastrophe that no Greek would be willing to risk or bare. The new Democracy Party won as expected.
Markets rallied Monday morning, especially the Greek stock market.
The National Bank of Greece was up 20% and the Bank of Cyprus was up 25% in a couple of days.
Put that in financial terms, $100,000 invested in the Bank of Cyprus would have made you $25,000.
I didn’t do it, just to let you know… Not through fear or anything else, it’s just not that easy to setup accounts and invest in the Greek Stock Market from Australia in just a couple of days.
Would I have done it if I had an open account?
Would it have been risky?
Not really, if you’ve been following the last 12 months.
Is it out and out speculation? Of course it is.
Is there still an opportunity?
Considering the all-time high of the Bank of Cyprus was $8 and it’s trading at $0.30, I think there’s plenty of money to be made. But don’t get me wrong, there are plenty of risks in this strategy and you have to get your timing right.
It’s not a buy and hold scenario.
Here’s what you should be learning from this crisis…
There is opportunity and plenty of it. We haven’t seen the last of the stock market gyrations globally, the next 3-6 months is going to be an amazing lesson in human psychology and fear.
The main lesson here is understanding how to be contrarian and opportunistic when there’s fear, gloom and doom around you.
Here’s a perfect example of that…
We all know the Germans are playing a major role in the Euro crisis, but there was a time when their market was down 90%.
The year was 1945, they had just surrendered to the allies, the future looked bleak. Nobody wanted to see them rebuild. The French (current buddies), oddly enough were opposed to restarting the German industrial production.
They didn’t even have a stock market until 1949.
There were other problems too. The country was in between the cold war that was emerging between the USA and Russia… Unemployment was through the roof, hope was slim if they had any.
From 1949 – 1959, the German Stock Market returned 4,094% …compared to the US return in the equivalent period of 426%.
Isn’t it ironic that the Germans were once upon a time in a similar position?
Yes, I know there are a lot of differences between Germans and Greeks and there are a lot of potential scenarios that could play out. Far too many to mention in this short email.
But Greece as a country will not disappear. It will still produce something. People will live there and lots of folks will holiday there as well… The sun shines bright from April until October (Germans love that).
My views going forward… I’ve got plenty.
So many potential twists and turns in this Euro crisis, and so many things to learn from a financial education point of view.
But let me put this out there… People think that this crisis will end with the Greeks leaving the Euro and then the Spaniards and Italians, etc, etc, etc.
…here’s a controversial contrarian opinion.
There will be exits form the Euro, but it won’t be the Greeks or any other Southern European country…
Drum-roll please…. It will be the Germans.
Hmmm… Now that would be a classic turn of events, wouldn’t it? The Germans leaving the Euro? Think about it. They’re doing all the lending and the only thing that is happening is it’s pissing off their own people.
There are also plenty of other economic reasons why this is a plausible scenario.
Don’t rule it out.
Don’t forget… When it comes to theatre, drama.. the Greeks invented it.
Signed with Success,
P.S. For goodness sake, don’t rush out and on my bullish view, buy into the Greek stock market. Even if it is something that I’ll be doing when I set myself up. If nothing else, watch, listen and learn from all this.
One thing for sure, there are several opportunities around the corner in the next 12-24 months.
P.P.S. It could come down to this… On Thursday night (Friday morning), the Greek soccer team plays the Germans in the Euro 2012 Quarter Finals. What do you reckon? Double or nothing? The Greeks would be up for it.