By Dimitrios Koutsoubos

It is a fact that greek investors are less mature compared to global investors. Τhat is reflected to the Greek Stock Market, as expected. In Greece, irrational behavior and valuations are more often and more intensely experienced, as a result of loose connection between stock prices and fundamentals. A wrong conclusion after the above, is that value investing makes no sense in Greece. I will attempt not only to break this impression, but also try to reveal the truth, which is total different than the obvious.

The first complaint I hear from friends who make their first steps in long term investing is that market is injustice against them. They say, “buddy, I have bought that stock. It is so cheap, but it does not move. Other expensive or bad stocks are skyrocketing. Greece has not a real stock market!”. A possibility is that they may be wrong about valuation and erroneously thinking it is cheap; especially, if they have focused only at a single ratio, or if they miss the holistic view. In this case they should not blame Value Investing or Fundamental Analysis for their failure, but blame themselves and their inadequacy.

However, you hear the same complaint from experts in reading annual reports and filings. In the previous case, it was the lack of knowledge. In this case, it is the lack of patience. It is very selfish to expect that a market full of wrong valuations should immediately restore the fair value whenever you open a position. The irrational market is the reason you can buy cheap and sell high. The long time you must wait, is the other side of the same coin, printed with the word “opportunity”. If you seek for it, you must accept the dark side.

Developed markets are more efficient and fair. Investing culture is superior. So, when a company makes a new forecast or when conditions change, everything is reflected in price. That means opportunities are more spare to be found there. You think you found an opportunity, but market has comprehended better and deeper than you. Of course, even in developed markets there is some irrationality, connected to stock market cycles or some cases of speculation. True opportunities in developed markets exist only if you have found something unknown or not well comprehended by others. However, the basic rule is the same again, in Greece or everywhere; true opportunities take time to reach fair value.

Simply, less developed markets, like Greece, contain more opportunities, due to the presence of inferior investors. Mostly, they are bad “players” who do not examine even the basic data. In developed markets due diligence is almost a given. That’s sad for Greece, but poses an opportunity for us. Greek inferior investors, who do not recognize value and value investing means less competition for us. When competition is inferior, you may excel! I have seen that in practice, in my investing. In greek stocks, success rate is undoubtedly higher. Only takes following the principles of Value Investing, which require knowledge, faith and patience.

Dimitrios Koutsoubos

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