Greece, the World's Best Investment. No Joke

Greece isn't out of the financial woods by any means. Yet it's turned out to be a winning investment since the end of 2014, the top debt performer in the euro zone since January and the best of all assets in the world since July. Since the anti- austerity party Syriza was elected, there hasn't been a stock, bond, commodity or currency market that produced anything resembling the return of Greek debt, which earned more than 100 percent in a handful of months, according to data compiled by Bloomberg. Winners Since July 8

Greece beat every publicly-traded asset as its bonds increased in value from their lowest point in July to their highest today. Anyone sophisticated enough to buy those Greek bonds while simultaneously shorting, or borrowing the money to sell, the similar-maturing government securities of Dr.Fratzcher's Germany -- the most creditworthy country in the euro

zone -- made a big profit on that trade too.

On Jan. 25, Alexis Tsipras swept to power as Greek president with a seemingly-contradictory mandate to end five years of reduced government spending while securing the final 7.2 billion euros of 240 billion-euro bailout funds from resistant European Union creditors. Six days later, the interest

rate on the benchmark 10-year was at a 15-month high of 11.2 percent. Buying that debt then and holding it until today when the yield has fallen to 8.11 percent, driving up the price, would have returned 26 percent.

A few days after Tsipras's victory, the British Broadcasting Corp. that it was "just a matter of time"

before Greece abandoned the shared currency of the monetary union and the euro disintegrated. "The problem is that there is no way that I can conceive the euro continuing, unless and until all of the members of the euro zone become politically integrated -- actually even just fiscally integrated won't do it," Greenspan said.

While the outlook improved to the extent that the yield on the benchmark Greek bond had declined to 10.8 percent by March 24, it wasn't enough to the billionaire chairman of Soros Fund Management.

The climax of pessimism came in the first week of July, after Greeks voted to reject austerity policies prescribed by its international creditors. That's when Dr. Fratzscher, the Oxford- and Harvard-educated former head of policy analysis at the European Central Bank, wrote in "The referendum translates to a political and economic catastrophe for Greece." He also made this "A Grexit is and remains the worst

option for Greece. It is becoming more and more likely."

Investors didn't see it that way. Their enthusiasm for Greek debt reflected in its rising value was a vote of confidence in Greece's future -- and also in the creditors' prescription of medicine as treatment for

Greece's economic ills.

Had anyone rejected Dr. Fratzscher's perspective and bought Greek bonds yielding 19.2 percent when he made this prediction and held them until today, his would have been 101 percent. That means an investment of $100 million on July 8 would have been worth $201 million within two months. Over the

same period, the benchmark for all European bonds returned little more than 1 percent. An investment in the same European benchmark since March 24 lost 3.3 percent, according to data compiled by Bloomberg. And while the buyer of Greek debt since Jan. 31 has a 26 percent return today, the European benchmark lost 1.8 percent during the same period.

Since July 8, nothing in the world earned anything close to the return ofGreek bonds. Throughout 2015 there were two things that never changed. Polls showed that Greek citizens consistently preferred

the stability of Europe's monetary union to the instability of drachmas. Similarly, no European head of state ever said the EUwanted Greece to leave the euro zone. The euro, which both sides declared their currency of choice, wound up being the instrument that made investors in Greek bonds the winners of 2015.

Source: Bloomberg