Tuesday, September 13, 2011

At Some Point Germany Has to Become an Appealing Investment

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While we've had a quite serious correction in domestic markets, Europe has been crushed the past few months - for obvious reason.  As I was looking over the charts last night, it was stunning to see a country like Germany, the fourth largest economy in the world, mangled to the tune of a 33%+ loss in under two months.  No matter the outcome of this crisis (and fact the Eurozone is probably headed for recession anew), this is a very dynamic economy which has probably melded the best parts of 'capitalism' and 'socialism' (I hate the labels) to create an export machine with a high standard of living.  I'd argue (frankly I don't see any solid counter argument) that these policies have created a much better recovery for 'Main Street' Germany than the 'recovery' in the U.S. the past few years.  [May 13, 2011: German Economic 'Miracle' Continues as 5.2% GDP Growth Blasts Past U.S.] [Jan 13, 2011: Germany Puts Finishing Touches on Impressive 2010] [Oct 1, 2010:  German Unemployment Rate Down to 7.2% after Peaking at 8.7%; Can We Learn Anything?]  Of course Germany is being weighed down by the anchors in the region, but ironically as the euro finally gets hit, this will actually help their exports.

[click to enlarge]



The DAX has now given back 2 years of gains, and now sits at levels last seen in summer 2009.  Granted it could get 'worse', but at some point here this country full of multinationals (the elite standard in a globalized world), has to become a very appealing long term investment. 

Here is the ETF for iShares Germany (EWG) - very top heavy with those multinationals; thankfully mostly industrial rather than 'financial':



SIEMENS AG-REG 10.49%
BASF SE 8.09%
BAYER AG 6.58%
SAP AG 6.20%
DAIMLER AG-REGISTERED SHARES 6.05%
ALLIANZ SE-REG 5.78%
E.ON AG 4.87%
DEUTSCHE BANK AG-REGISTERED 4.66%
DEUTSCHE TELEKOM AG-REG 4.39%
BAYERISCHE MOTOREN WERKE AG 3.31%
Total60.42%

[Jun 30, 2009: Will Germany Transform Itself?  Does it Want to?]
[May 21, 2008: Who is the World's Largest Merchandise Exporter? Not China. Or the US]

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