What if you bought Greek government bonds in 2005?
Bonds & cash · Government. The hindsight answer, year by year, against the only benchmark that matters.
Could you have picked it? Play1.1× · S&P 500 same money: $5,763
$1,000 in Greek government bonds at the start of 2005 would be worth about $1,100 today. A plain S&P 500 index fund over the same years would have made more — the boring option won.
What happened: Greek government bonds were haircut by 53% in 2012.
The story
Greek government bonds were, for a few years after euro entry, priced as if Greece were almost as safe as Germany, yielding only slightly more. That changed in late 2009, when a new government revealed that the budget deficit was far larger than previously reported. Yields shot up, Greece lost access to markets and in 2010 it received the first of three bailouts from the EU and IMF, tied to harsh austerity.
In 2012 private bondholders took a haircut of about 53 percent on the face value of their bonds in the largest sovereign debt restructuring in history, with further losses from the lower value of the new bonds. In 2015 the Syriza government clashed with creditors, called a referendum, closed the banks and came close to leaving the euro before agreeing a third bailout. Those who bought at the depths of the crisis did very well: as reforms took hold and Greece regained an investment-grade rating in 2023, its bonds became one of Europe's better performers.
The lesson: The same bond can be the worst and best investment of a decade depending on entry price, since panic pricing often overshoots the eventual outcome.
$1,000 invested at the start of each year
| Bought in | Price then | Worth today | S&P 500 would be | Multiple |
|---|---|---|---|---|
| 2005 | $100 | $1,100 | $5,763 | 1.1× |
| 2007 | $105 | $1,048 | $4,789 | 1.0× |
| 2008 | $108 | $1,019 | $4,626 | 1.0× |
| 2010 | $95.00 | $1,158 | $6,071 | 1.2× |
| 2012 | $25.00 | $4,400 | $5,312 | 4.4× |
| 2015 | $60.00 | $1,833 | $3,301 | 1.8× |
| 2018 | $95.00 | $1,158 | $2,519 | 1.2× |
| 2020 | $120 | $917 | $2,092 | 0.9× |
green = beat the S&P 500 · red = lost money
Best entry point in our set: 2012, turning $1,000 into $4,400. The S&P 500 from that same year: $5,312.
On this day
Now try it without hindsight. The wheel decides the year and the asset class, you pick the position, ten seconds a pick, and we simulate to today. Greek government bonds is one of 258 positions on the wheel — including the ones that went to zero.
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