Can it get worse for Greek stocks?

Jul 21, 2015

- By Bill Bonner

Bill Bonner
On Board the Trans-Canada
"Have you people ever run a train before?"

Sarcasm seemed appropriate. It wasn't plainly crass or vulgar. Just mildly insulting.

The book we were later given on the train explained that the VIA - Canada's passenger rail system -- was inspired by the America's AMTRAK example. This is a little like getting on a cruise line that said it drew inspiration from the Titanic. But by then, we hardly needed any explanation. Our tickets said we were to be in the Prestige Class for the trip from Toronto to Vancouver. But there was nothing prestigious about the way we were handled. After waiting 10 hours to board, we were invited to drag our bags along a quarter mile of dock in order to get to the prestige car. By the time we got there we expected to be asked to bend over so the staff could whack us with a board.

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The train, scheduled to leave at 10 pm on Saturday night did not actually push off until 9 am the following day - after a caller advised us to get to the station "no later than 6" so we wouldn't miss it. We fulfilled our part of the deal. Alas, the canook Amtrak failed. Re-scheduled for 7, it was then rescheduled again for 7:30...then 8...

"The train got in late to the station...and then we had to wait to find a new engineer," was the word we got when we asked about it.

"People have been running trains for a long time," we began a lecture. "There is nothing unpredictable about it... Besides, a train is a big object, you should know where it is. Then, it's a simple matter to compute when it will arrive. You know, distance divided by speed..."

We felt an elbow. It was Elizabeth telling us to knock it off.

Tempted to feel sorry for ourselves, instead we said a prayer for the poor economy class travelers, who would probably be chained to their seats and whipped with barbed wire.

But now we are rolling along...too bad about the Wifi. There isn't any. Nor does the mini-fridge. And the train has been backing up as much as it has been going forward. But heck...the staff is friendly and the scenery is magnificent.

Word comes this morning that Greek banks have re-opened. Bank customers have been separated from their money for three weeks. Even now, they are allowed only brief conjugal visits. They may take out only up to 420 euros per week.

The Greek stock market has re-opened too. Without Wifi we have not been able to get an update. Greek stocks, as you might imagine, have gotten beaten harder than a traveler on the Canadian train system. They are down as much as 95% from their 2007 highs. The average one sells for only a little more than 2 times earnings. Many sell for barely a single year's cashflow.

It's not for us to know at what price Greek stocks should trade. But the Greeks have been around a long time. They're probably not going away. And neither are their companies.

And some of the biggest pay-offs in the investment world have come from putting money into places no one else wanted to go. It's the beaten down, despised, sad-sack of a market that has the greatest potential; it has nowhere to go but it.

If you had invested in the Turkish stock market back in 1988, for example, today your investment would show a 1,188,047% gain. Every dollar invested, in other words, would be worth more than $11,000. Back in 1988, Argentina was a mess too. If you had put your money there, you'd have a 39,297,300% gain. Had you invested $10,000, you'd now have $392,973,000.

But the drama isn't over in Greece. Poor Alexis Tsipras is stuck. On the one side is the hard place, where many of his party members are refusing to go along with the deal he just made. On the other are the rocks of Northern Europe, especially Germany, that are refusing to give an inch. Most likely, his government will be history in a few weeks, with the need for new elections...more negotiations...more cans, more kicks...and more absurdities.

In the meantime, it is amazing how much nonsense is published on the subject. The mainstream press has turned it into a simpleton's bug story, a struggle between Greek grasshoppers and German ants. Readers are expected to take sides - either for the poor Greeks or against them. Most economists weigh in on the side of the Greeks - urging Germany to give the grasshoppers a break -- more time...more money...and more rope. They believe it will stimulate the Greek economy, making it easier for Athens to pay its debts.

But the whole show is silly The Greeks aren't going to start acting like ants. They aren't going to pay back old loans, or new ones. And lending more money to people who already owe too much is never going to help an ailing economy.

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

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