We took profit on slightly more than half of our holdings on 14 Jun 2013 at a price of about USD $12.40, about a year later. We made more than double our money in the space of about 1 year.

We sold the remainder of our position at the price of about USD $19.50 last week.

Total holding period was about 2½ years. We made more than 3 times our initial investment.

The stock chart in the intervening period is attached below.

The risks in Europe seem to be increasing. Over the past few weeks, several events have made it so.

The near collapse and subsequent bail-in of the Portuguese bank Banco Espirito Santo certainly has put the spotlight back into Europe. In that particular case, investors of junior bonds were nearly wiped out. I would imagine that this event will reduce the attractiveness of junior bonds/preferred equity of nearly all the other struggling banks in Europe. This includes of course the National Bank of Greece.

This event highlighted that Europe’s problems are still not over and the economy is still struggling with deflation.

Deflation is something which is very difficult to deal with and I am afraid that the risks of the world’s central banks making a policy mistake that would trigger another crisis has increased.

In a recent report, I read that:

“If the labor market continues to improve more quickly than anticipated by the [Fed],” she told the Senate Banking Committee, “then increases in the federal-funds rate target likely would occur sooner and be more rapid than currently envisioned.”

Of course, this is a sensible policy if you’re talking about the US. Europe is another matter altogether. However, these days of connected global markets means that should Yellen ever hike interest rates (or even hints that interest rates will rise) … I think Europe will be in serious trouble.

Last week, I also came across an article in The Independent that is definitely worrying for Greece.

Brussels is considering pulling the troika out of Greece to allow Athens to pursue its own plan to improve the economy, European officials have told Reuters.

I think this is a good and sensible move and will eventually occur. But in the short term, it is going to make the risks in Europe (especially Greece) increase significantly. Hence, I am quite uncomfortable holding the preferred shares of National Bank of Greece at this point and sold out the remaining of our position last week.

I definitely did not anticipate this outcome. Clearly, I have underestimated how resilient the stock market of Vietnam currently is.

Another case in point is my largely erroneous bearish prediction on the Vietnam stock market in Feb 2014.

Perhaps many years of bearish markets in Vietnam have conditioned me to be very suspicious of rising prices.

Ironically, this is very good for the stock market because I am sure that many people who have invested in the market in the past few years must have shared my caution as well. If sufficient people feel like this, it will set the stage for a sustained bull market to occur in the Vietnamese stock market.

P.S. Again we are approaching the highs of about 600 to 620 set in Oct 2009 on the VNIndex. Ironically, I am still bearish. However, I am fully invested so I hope that my views will once again prove incorrect. It is far more difficult to be right on the short term direction of the market than to find good companies to invest in. The focus of my journey (and this blog) will be to find the good companies to invest in.