Life and Value After Default: A Follow-Up
In March 2012, amid the depths of the eurozone crisis and with Greece’s private-sector involvement (PSI) underway, we wrote a note titled “Equities – There’s Life and Value After Default” on our former Blogspot Blog “Macronomics”.
The argument was that the Athens Stock Exchange (ASE) and Icelandic equities could recover strongly once the acute phase passed. It drew on historical post-default recoveries (Russia 1998, Argentina 2001) and contrasted Iceland’s cleaner “let the banks fail” approach with more drawn-out European bank resolutions.
Fourteen and a half years later, the results (price indices, approximate levels from March 2012 to late October 2026) are as follows:
- ASE (ATHEX Composite): ~729 → ~2,588. Total return +255%, CAGR ~9.1%.
- OMX Iceland All-Share: ~644 → ~1,981. Total return +208%, CAGR ~8.0%.
- Euro Stoxx 50: ~2,530 → ~6,046. Total return +139%, CAGR ~6.2%.
- S&P 500: 1,408 → ~7,650. Total return +443%, CAGR ~12.3%.
Both markets more than tripled.
The ASE meaningfully outperformed core eurozone equities. Iceland delivered a solid recovery consistent with a cleaner restructuring. Both lagged the S&P 500, as most non-U.S. markets did during that period of American exceptionalism. There was further downside after the original note (especially in Greece into mid-2012), so the path required patience.
Assessment of our call: Directionally correct and high-quality for a macro positioning note written at peak eurozone pessimism. It correctly identified depressed, post-resolution markets as sources of value and ranked well relative to European peers. Absolute performance was solid rather than exceptional, and the opportunity cost versus simply owning the S&P was real. In the context of 2012 crisis work, it holds up as a good call - above average, not generational.
History rarely rewards perfect timing. It does occasionally reward the willingness to look past the immediate wreckage and ask where the equity is once the banks and the sovereign have been dealt with.
