Open Portfolio Buying Greece ETF GREK - Mike Swanson (08/17/12)
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Just bought 833 shares of GREK @ 11.92
If you have been following my work than you know Greece is something I have been talking about for well over a year - and eventually investing in Greece. I am taking an investment position in Greece today. The Greece stock market is so undervalued that it has the same type of cyclically adjusted P/E valuation that the United States did at the bottom of the Great Depression.
I had thought Greece would default and that would bring a great buying opportunity, but at this point the Greece stock market may have bottomed no matter what and is trading in a way that it is in danger of breaking out to the upside. It could open up 5% higher one morning and I don't want to not be in it if that were to happen. Next month we will know whether they are going to get bailed out or will default once the trioka team gives its report and as I posted the other day the ECB has been covertly propping Greece up.
If they get another bailout Greece stock market will rally higher again.
If they don't they won't default for several more weeks. That means that over the next few weeks no bad news is going to come out of Greece. To me this makes the immediate term risk is to the upside and missing out.
I want an investment position in Greece no matter what so I am making one small enough that I can hold it. At this point the risk to the downside would be to the June lows, that's about a 20% drop for the Athens stock exchange. From there I would expect it to make a double bottom.
But it seems at this point more likely to just breakout before the month is over or go up on more bailout news.
Here is a chart of the Greece stock market.
GREK is an ETF that holds the largest Greece stocks. As you can see it is trading in a very narrow range with resistance at 12 and support at the moment around 11. I fear that it could just gap up one morning and take off so I am taking a position in it.
GREK has a P/E of 4!
After today I am more than fully invested with the money currently in my portfolio and do not plan on doing anymore buying until there is a 5-10% pullback in the markets later this year - probably sometime in the Fall. Then I will buy more. I also hope to add more money to the account over the coming months.
I did some buying yesterday in GDXJ, GLD, and GCC as you can see from yesterday's update by going here.
This GREK position is about half the position size of the investments I have been making. That is so I can give it more room and not worry if bad news does come out. At the same time I expect GREK to go up once it finally goes into a new bull market enough that even a small position can become a big one.
One note GREK is thinly traded, but I don't care because I'm not looking to trade this. This is an investment position.
The GREK ETF only has 5.9 million in assets in it. This is because institutional investors have fled from Greece over the past few years. Mutual fund managers are too scared to have any Greek holdings on their portfolio's because they are afraid if they do than their investors will think they are crazy or think they have been holding them as they have collapsed. This is one reason the P/E for GREK is 4. But that is where I believe opportunity comes in.
For a full spreadsheet of my portfolio click here.
For a list of transactions in the portfolio click here.
Will do a video update in a few days.
Matt Frailey also did a video update on his site about the markets. To watch it click here.
Matt is running a discount for his trading service. I am now investing in stocks and positions with a long time horizon. Matt does much more short-term trading so if you are looking for quick trades you might want to check out what he has to offer. His special ends today. To check it out go here.