Greece Not a Surprise to Some

Three days ago Greece seemed split on the referendum. The results, however, showed the “No’s” won by a wide margin. On July 4th I was told, by someone who is pretty knowledgeable about history, that the Greeks would probably vote “No.”

His reason was that “No” is the same response the Greeks gave Mussolini at the start of WW2 – another time in history when the Greeks felt bullied by larger European neighbors. The connection seems like a bit of a stretch at first, but these moments have a strong impact on national character and culture. Greece even has a holiday for the anniversary of the delivery of this response. I’ve always thought history is more important than math for learning about investing.

Yesterday I was poking around the media. It looks like the Huffington Post caught this, but most other outlets missed it.

In short, there is a lot of speculation that the Greeks are “bluffing” or are just trying to get more negotiating leverage. I think it goes a lot deeper than that, so don’t expect a quick resolution with the Germans this time.

This doesn’t mean you can predict what will happen in the investment markets. A Greek exit from the Euro has been in the works for years. Remember the market downturn in 2011 and 2012? Many had tried to make forecasts based on Greece four years ago and jumped out of the markets. Now I’m sure they wish they hadn’t done that. Below is a chart of the MSCI EAFE NR index (basically Europe, Japan and Australia). This would match up with most investors’ international funds. The returns since June 30, 2012, the bottom of the Greek scare back then? 50.75% or 14.19% per year.


MSCI since 6-30-2012

Source: Morningstar
Photo by Paul Stephenson