Buy Germany

It has been a miserable summer for the Germany stock market. It reached its top in May and started to drift down after that. Around end of July it started a free fall. From its top to the bottom, it plummeted 30% within just a few weeks. Was it because Germany was much worse than the US in its economy? Not at all. On the contrary, Germany's economy is doing much much better. It is the best economy in the Europe. I guess you all know why its stock market was such a mess. Yes, it is because Greece and the other PIIGS countries. Their huge debt load is crashing everyone in the Eurozone. But I think the worst nightmare for Germany is likely over. Yes, there is no way that anyone can resolve the debt problems for PIIGS and I have said and will continue to say that I don't think the Euro can survive and it will be dissolved within 5 years. If this happens, it will be great for Germany actually since at the moment Germany is the only Euro country to hold the burden. It is almost like a cash cow for the Euro countries whenever they need money. Regardless, I do think in the very near term the Euro leaders will do anything they can to delay the death date. Likely in a few days they will come up with something which will not allow Greece to default immediately and will let Euro look like it has some life. The market and the whole world will like it, although it is nothing but printing money and it is just a delayed death penalty. Nevertheless, I believe the markets, especially the European markets will bounce back strongly due to this gimmick, in the near term. Don't forget, regardless of the long-term economic prospects, the stock market is often short-sighted and can be very irrational for longer than you are solvent. They are very much driven by short-lived sentiments.

If you believe me, you may consider EWG, an ETF for the Germany stock market index. I like it especially due to its technical indicators. Since it bottomed at $18 a month ago, it has climbed up 15% to around $21 nowadays, a clear sign of uptrend. With a P/E ratio of 9, it is cheaper compared with S&P500 that has a P/E of 12. The major companies in the fund include world class bellwether companies in Germany such as Siemens, Bayer, Daimler (Mercedes-Benz), BMW, SAP, Deutsche Telekom etc. Finally it also pays a good dividend at a 3.6% yield. 

EWG may decline these days prior to the final deal announced for the Euro crisis. I think it will be a great opportunity to get in.