What made you so bullish on Germany at that time?
The bull market had started here in August 1982. More important, Germany had not had any kind of bull
market since the previous all-time high in 1961, twenty-one years earlier. The German market had crumbled in 1962
and had essentially gone sideways since then. In the meantime, the German economy had boomed. So there was
basic value there.
Whenever I buy or sell something, I always try to make sure I'm not going to lose any money first. If there is
very good value, then I'm probably not going to lose much money even if I'm wrong.
But you could have bought that market ten years earlier on the same theory.
That's absolutely right. You could have bought it in 1971 for exactly those reasons and watched German
stocks sit for ten years, while we had a major bull market in the U.S. But this time there was a catalyst. You always
need a catalyst to make big things happen. At the time, the catalyst was the upcoming German elections. I figured
the Socialists were going to be thrown out, and I knew that the opposition party, the Christian Democrats, had a
platform designed to encourage investment.
My basic assessment was that if the conservative Christian Democrats won the election after having been out
of power for so many years, they were going to make major changes. I also knew that many German companies were
holding back from investing in capital equipment and expansion in 1982 in anticipation of a conservative victory.
Therefore, if the conservatives did win, there would be a real explosion of pent-up capital investment.
Was the election a toss-up at the time?
Not in my mind.
I mean in terms of the polls.
I guess so, because when the conservatives did win, the market exploded flmt same day.
What if they had lost?
I still didn't think I would have lost any meaningful money for the reasons I mentioned before. I had every
anticipation that there was going to be a major change, and that the bull market would last for two, three, or four
years.
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