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Greek Stocks Are Down 60% Since Last Summer. Time to Buy?By
Tuesday, August 18, 2015
Greek stocks are down 60% since their peak last summer...
It's hard to find investments that are down that far in price... U.S. stocks are up hundreds of percent since bottoming in 2009. U.S. real estate is coming back strong. And the U.S. dollar has soared.
So is it time to speculate in Greek stocks?
In short, the answer is NO, it's not time to buy – yet.
Today, I'll tell you why I'm not buying right now... I'll also tell you what will finally cause me to buy... possibly early in 2016...
Six months ago, I told you NOT to buy Greek stocks...
Greek stocks had lost nearly 50% of their value in less than a year, and investors were getting excited... The main Greek stock fund – the Global X FTSE Greece 20 Fund (GREK) – had fallen from around $25 per share to around $14 per share, and investors started buying it up like crazy.
The blue line below shows the dramatic increase in buyers in GREK. The blue line is the shares outstanding. This was a sign that buying Greece was WAY TOO POPULAR. Take a look:
 Everyone was buying Greece back then... The thing is, everyone can't be a contrarian at the same time – then you're not a contrarian! As you can see, Greek stocks have continued their slide over the past six months. GREK is down from around $14 per share to around $10 per share.
The crazy part is, investors continue to pile in...
The shares outstanding of GREK are up dramatically since I wrote that essay.
Another way of looking at how popular Greek stocks are is to check out the Google Trends search results on "Greek stocks" through the end of July (the last complete month of results)...
As you can see below, Greek stocks are more popular than ever!
 In short, Greek stocks have fallen a lot... The main Greek fund is down from a high of around $25 per share last year to around $10 per share today. Greek stocks may be a great buy someday soon... but today is not that day! The trade is still way too popular...
The big money is made when you buy something that is completely out of favor... once it starts to show signs of an uptrend.
Greece doesn't tick either of those boxes today.
So don't buy Greece yet...
Good investing,
Steve
Further Reading:
Steve isn't buying Greek stocks right now, but he likes European stocks as a whole. "We have one of the great setups that I like to see...," he writes. "Europe is going from uncertainty to certainty. That should continue over the coming months." Get all the details here.
Steve also says it's a fantastic moment to buy real estate. "Now is an incredible moment in the housing industry. You don't have to become a developer, but you need to get on board." Learn more here.
Market NotesTHE HUGE BUST IN RESOURCE STOCKS Today we're updating you on one of the most hated sectors in the market...
Longtime readers know the natural resource market goes through huge cycles of boom and bust... For the last few years, it has been all "bust" for these companies.
One way we like to gauge this is by checking in on the S&P/TSX Venture Index – the "Dow Jones Industrials" of resource stocks. This index tracks the prices of hundreds of small energy and mining firms. Today, many of these companies are struggling to survive.
In 2010, 2,364 companies traded on the index. As of December, that number had shrunk to 1,971. That's nearly 400 companies that simply don't exist anymore. Some were bought. Many went out of business and delisted.
As you can see from the chart below, nobody wants anything to do with resource stocks right now. The index is down more than 75% from its 2011 high... and more than 40% over the past year alone. Times are tough for natural resource companies today...
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