Friday, October 28, 2011

Revisiting the Germany Call

Back in mid September, I wrote [Sep 13, 2011: At Some Point Germany Has to Become an Appealing Investment]

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. 

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.

While it was not an immediate 'buy' thesis, it was something I'd be close to pulling the strings on - at the time iShares Germany (EWG) was just under $18, after bouncing off the $17 level.  It would bounce off that $17 level twice more in the coming weeks before starting a rebound.  Yesterday it touched $23, before closing just below it.  Even if you were 'early' and had bought on the date of the story, that would have been a cool ~28% in about 7 weeks.  Not too bad.

[click to enlarge]

No position

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