Athens market is down 95% since 2007 Is it time to buy Greek stocks yet? The latest collapse on the Athens stock market has left stock prices there looking extremely cheap by certain measures. A broad index of Greek stocks is trading at less than four times per-share earnings of the last 12 months, according to data from FactSet, a research service.“The time to buy is when there’s blood on the streets.” --Wall Street wisdom To put that in context, a broad index of stocks for the rest of the world is trading at more than 15 times recent earnings. And according to FactSet, an index of Greek stocks is changing hands now at just 54% of the so-called “book” value, meaning the per-share value of the assets minus the debts. The rest of the world: Nearly 200% of book value. The cheap valuations in Athens reflect the turmoil and panic in the the wake of last Sunday’s general election victory by the radical Syriza party. The election result threatens a resurgence of the country’s financial crisis. Syriza wants to end the country’s years of economic misery and austerity. Many fear, or suspect, Greece may end up defaulting in part on its international debts. But does this fire sale make the Greek stock market a buying opportunity? Given the scale of the economic, political and financial turmoil, anyone buying Greek stocks is taking on a lot of unknowns — and as former U.S. Defense Secretary Donald Rumsfeld might put it, you’re embracing a lot of unknown unknowns as well as known unknowns. Most of the financial data for companies there, including forecasts, need to be taken with a grain of salt. Anything can happen, and probably will. On the other hand, it is a long-standing principle that “the time to buy is when there’s blood on the streets.” You don’t get a bargain when the times are good. Someone buying Greek stocks is not buying Greek government bonds. They are buying a share in Greek-based businesses, and these can be presumed to survive, and even thrive, when the crisis has finally ended. There are reasons to suspect Greek stocks GD, +4.64% are underpriced today. Simply put, they should be. A lot of domestic investors are no doubt selling at any price so they can get their money out of the country. Meanwhile, few professional investors dare buy these stocks during such a panic, because the career penalty for calling it wrong would vastly outweigh the career benefit for calling it right. And oh boy is this market down a long way. The MSCI Greece index , a broad index of large and medium-sized stocks traded in Athens, hit 1,040 on Oct. 31, 2007. On Thursday, Jan. 29 it closed at 48. No misprint. That 95% collapse beats the Great Wall Street Crash of 1929-32. It is also worse than the crash seen in other countries that have gone through similar financial crises in recent years, including a couple of which defaulted on their debts and one which needed to be bailed out. According to MSCI, the Greek crash is worse than the one in Russia during the default crisis of 1998, that in Argentina in the default crisis of 2001-2, and in the United Arab Emirates in 2008-9. The Greek stock market DWGCT, -0.97% is small but encompasses a range of industries and risks, from volatile financials to bottling companies, hotel operators, utilities, manufacturing concerns and so on. U.S. investors who want to plunge into the Greek maelstrom should consider the Global X FTSE Greece 20 Exchange-Traded Fund GREK, +9.10% , which invests in the 20 biggest companies by market value. It has operating expenses of 0.61% a year. History has often been very kind to those who bought stocks that everyone else was afraid to touch. The MSCI index of Russian stocks has generated a stunning 15-fold return on your money since the depths of the crisis there in 1998. Similarly, the MSCI Argentina index has generated a tenfold return on your money since the depths of the crisis there in 2002. Those who stuck with mainstream investments earned a fraction as much. Make of it what you will. Brett Arends