Investing in Greece requires a strong stomach.
When we first tipped it as a risky but attractive bet back in September 2012,there seemed to be daily headlines declaring that the country was about to vanish off the economic map.
But all that panic had driven prices down to bargain basement levels. Even if Greece had left the euro, it could still have proved a good, if scary, investment. As it turned out, it stayed in the euro, and the index surged by around 50% over the next 18 months, making it one of the top performing markets in the world.
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Things even started to improve. The latest figures suggest the economy may be about to start growing again.
Unfortunately, in recent months, the Greek stock exchange has slid by a third, giving up most of its gains. It fell by 6% on Wednesday alone.
So what's gone wrong? And should you stick with the market?
Why is the Greek market tanking again?
There are two main reasons for the sudden slide in Greek stocks. Firstly, while some growth may be returning to Greece, it is nowhere near enough (at least at the moment) to make up for the past five years. The country is still in the grip of deflation, with prices 0.8% lower than they were a year ago.
Unemployment is still over 25%. Young people seeking work are in an even worse position they are more likely to be out of a job than in one (officially, at least).
Secondly and probably more importantly there's the politics. Voters are angry at what they rightly perceive as widespread corruption. The latest round of reforms' contained provisions making it much harder to prosecute members of parliament and corrupt state officials. So it's not surprising that the government is trailing in the polls.
In theory this shouldn't matter the next election isn't due until 2016. However, the market's big fear is that the current coalition could collapse, leading to a snap election. Some experts believe this could take place as early as the first few months of next year.
If this happens, Syriza, which came close to winning last time, might gain power. It has pledged to reverse spending cuts and to default on debt. The fear is that this would lead to Greece being kicked out of the euro and being shut out of international markets.
On top of that, Syriza is to the far left politically think a party led by the Greek equivalent of the late Tony Benn and so could wreak havoc on private firms.
To try to claw back some standing in the polls, the Greek government has said it won't take any more support from the Troika' (the European Central Bank, European Union and the International Monetary Fund) bailout squad. This would allow it to avoid meeting the strict conditions attached to this help. So it could avoid reform and raise government spending.
One reason that Greece can even consider this is that its budget deficit (the government overspend) even counting interest payments is now expected to be only 0.2%. This would normally be seen as a sign of strength by markets.
But investors are worried that without support, a default (or at least another renegotiation') by Greece would become inevitable. The budget deficit might be low, but the country's national debt is heading for 168% of GDP. So it's very hard to see how haircuts' can be avoided.
As a result of this dispute, Greece's cost of borrowing has shot up the yield on the ten-year Greek government bond has risen from around 6% to nearly 9%, the highest level this year.
So should you buy into Greece?
It's all pretty grim.
However, I think there are still strong reasons to buy Greece. Firstly, the worst seems to be over. The economy is expected to grow by anything from 1.5% to 2.9% next year.
Secondly, it seems likely that the Troika and the government will come to some sort of deal that allows the government to relax austerity but keeps Greece within the programme. The truth is that both sides have invested too much for the deal to fall apart.
But even if Greece did end up leaving the euro, it wouldn't be the end of the world. Restoring the national currency would allow it to use inflation to slash the real value of its debt, and to make exports (and tourism) competitive.
Such a scenario would be a nightmare for Brussels and Berlin but as far as the Greeks go, it might be the best thing that could happen.
Finally, the best reason to buy into Greece remains the reason we tipped it in the first place it's still very cheap. According to US asset manager Mebane Faber, the market has a cyclically adjusted price/earnings ratio (Cape)of around four times earnings. For comparison, the UK market has a Cape of 11.5, and the German market has one of 14.
Even the Russian market is more expensive, on a Cape of 6.4. While we at MoneyWeek are divided about the merits of Russia, is Greece really a less stable country?
Other metrics tell a similar story Greek shares trade at a discount of around 20% to book value. So while I'm not saying you should be the house on it, I'm happy to stick with putting a small chunk of my portfolio into Greece. The simplest way is via the Paris-listed Lyxor Athex ETF (Paris: GRE).
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