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Wednesday September 12, 2012
Greece: The 'ultimate contrarian play'
by William Corney, editor No-Load Portfolios Perhaps the ultimate contrarian investment is that of Greece, and the Global X FTSE Greece 20 ETF (GREK), which began in December of last year and is the only fund available to invest in the Greek economy. It is composed for the 20 largest publically-traded companies in Greece, with the top five holdings accounting for 53% of the assets of the fund. These stocks are Coca Cola Hellenic Bottling, National Bank of Greece, Opap, Hellenic Telcommunications Organization and Titan Cement Co. Annual expenses are 0.69%, which are quite reasonable for a European fund. We all know that Greece is in an economic pickle. After adopting the Euro as their currency, they took on much more debt than they agreed to while misleading the European Union about the extent of their borrowing. To make the long and shameful story short, the Greek government can no longer pay the interest on previously borrowed money, while they still need to borrow more money to cover their current expenses. The question now is whether they will stay in the Eurozone or not. If they leave the Euro, Greeks will wake up one morning and all the Euros in their bank accounts will be replaced by drachmas. The foreign exchange markets will devalue the drachmas dramatically, perhaps by half to the Euro. Greek inflation will soar and all the holders of Greek bonds -- individuals, banks and countries -- will have massive losses. So who would want to buy the Greece ETF? Either an optimist with a long, long time horizon or a trader who attempts to capture sort-term gains from swings in the price of the fund. Learn more about this financial newsletter at No-Load Portfolos, 8635 W. Sahara, #420, The Lakes, NV 89117 Related articles: 
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