Wednesday, December 6, 2017

And Yet, It Moves..

One of the most obvious characteristics of bubbles, manias and their opposites, implosions and apathy, is the stubborn refusal of the crowd to see what stares them in the face, choosing instead to believe only their version of "truth" - no matter how outrageous.

Thus, tulips are forever rare and precious, people invest in companies formed "for carrying-on an undertaking of great advantage but no-one to know what it is!!” (1720 South Seas Bubble),  real estate only goes up, big banks can't go bust, Capesize bulk carriers are "worth" $250 million each, garbage (sub-prime loans) cut into small pieces turns into gold (CDOs), etc.

It doesn't matter what it is, once people fall victim to the crowd mentality they take leave of their common sense.  Those who try to say otherwise are scoffed, ridiculed or outright threatened with dire consequences.  Galileo was a famous case in point, when he had to choose between scientific nonsense or death on the pyre - though he did manage to say "E pur si muove" (and yet, it moves) sotto voce.

Today's case in point is the cacophony of analysts who stubbornly refuse to accept that the Greek economy is rebounding and that investor confidence is returning fast.  

On the economy (see previous posts), one can parse the GDP numbers and come up with their own interpretation - at least for a while. But you definitely cannot "spin" government bond yields crashing to 4.78%, the lowest levels since 2009 when they stare you in the face.  Greek risk is going down fast, period.

The good news is that some smart money is taking notice.  Brevan Howard is one of the world's most respected hedge fund money managers with some $20 billion AUM, and it just announced the launch of two long only funds to invest in Greek securities and real estate.

 Yes, it moves.  And IMHO it has a very long way to go before Greek assets are fairly valued once again.


  1. Your insightful research is always appreciated - welcome back from your hiatus. Initially I was drawn to what I read as Hellas-IOU's after spending six interesting years in Gythio. I departed in late 2006 before the downturn began. I agree the time is right. As a professional, may I assume you're not restricted to ADR's? Any other source material available online?

  2. Hello rwd and thanks for your appreciation. The pen name is a multiple play on words, mostly Hell-as-IOUs... But Hellas obviously comes into play too :)

    These days you can participate in international markets via many instruments, shares on local exchanges, dedicated country funds, ADRs and CFDs - though I'm very wary of the latter because of the enormous leverage and the way they are set up to trade OTC. They remind me of bucket shops from the early 20th century..