Do I have good investment ideas, and am I realizing them the right way? – that are two questions I am making myself almost every day. Maybe my ideas are good, but there are many failures in the execution. One example is stock market in Turkey and Greece.

In last summer I wrote about the stock market of Turkey (August 10, 2018), and Greece (August 29, 2018). (Later, in a summary again). I had the impression that Turkish shares are promising a good return after an epic fall, the collapse of the Turkish lira, plummeting more than 15 percent in a single day. After some foolish declarations their leaders made. And I meant Greek stocks were not so really alluring. There was no “blood on the streets” in Greece (in financial or economic sense), but seemingly there was blood in Turkey.

38 percent in 6 months

Later, in Autumn, Turkey corrected some errors and stabilized their currency. (A very inflationary money, by the way, a good argument for cryptocurrency– or gold-holders.) The Turkish assets were climbing several months, the TUR ETF (US exchange traded fund) increased from 21.42 USD (from the day of my blogpost) to 29 in February – 38 percent higher. Yes, it was a good idea…

Now, it is falling again since the municipal elections when the ruling AKA party lost some of its earlier followers. The ETF closed only at 24.16 USD in Thursday. But that is still 12.8 percent in 8 months.

(Chart courtesy of Stockcharts.com. Click for higher resolution.)

Greeks: the same level

The US ETF “GREK”, containing Greek stocks, was at 9.08 USD at time of writing in August and fell like stone until Christmas. (To 6,8 USD, means 25 percent loss.) Maybe those point was a good buying opportunity, but the same happened with most emerging market indexes. Although Greek market underperformed until December 24, the MSCI International EM Gross emerging market index fell only 9.4 percent in the same period.

(Chart courtesy of Stockcharts.com. Click for higher resolution.)

Thursday, the GREK ETF closed at 8.62 USD, appropriately five percent lower than August 29. By data of Nasdaq, this ETF also paid 0,166 USD dividend in December, that is 1.8 percent of the original price. So, I was right also by Greek stock so far: between end of August and the 18th of April, this ETF had a slightly negative yield. (TUR also paid out 0.07636 USD, but this dividend yield was only 0,3 percent.)

New hype approaching?

But that was the past, what promises the future? I sold my Turkish stock market ETF on October 3, 2018, with 7.8 percent gain in USD terms – far too early. And didn’t buy Greek shares last year. At this time, I don’t see the blood on the streets in any of these two countries, none of the two markets seems to be very cheap for me. Both are vulnerable and highly risky, so I would buy only near multi-year lows, when all are scared of these investments and nobody wants them. That’s my usual strategy. But it’s not the case now, at the contrary.

It is possible Greek stocks will jump a little more, I see signs of some sort of beginning hype. (But not for me, I still don’t want to buy it.) The German finance site Handelsblatt.com wrote about “The incredible rise of Greek stocks” (“Der unglaubliche Aufstieg griechischer Aktien”) some days ago. Some details:

For a long time the Athens stock exchange index Athex Composite knew only one direction: downhill. (…) Now they can not get enough. "Investors are in the best mood for twelve months, the bulls have the upper hand in Athens" (…) After eight years of recession, Greece's economy returned to growth in 2018. (…) The economic recovery is also reflected in the company balance sheets (…) The rally has been supported in recent months, especially by bank shares (…) the bank shares are already overbought, warn brokers.

“Smart money” optimistic

Bond market, dominated by institutional investors, the “smart money”, is also optimistic. The Greek 10 years bond yield sunk to 3.32 percent, not seen since the summer of 2005. (How could I short Greek bonds, please?) The risks are including new Greek parliamentary elections in October. Much worse if Italy triggers a new Eurozone crisis, affecting also other South-European countries. (And all Europe.)

Other sign of a possible Greek hype is a study of Capital Economics, they wrote today: “Italy verging towards becoming as risky as Greece”. Also, Financial Times, saying “Greek debt touches lowest yield since 2005. Crisis-ridden Eurozone member attracts investors as growth returns”.

(Cover photo: Own work)