If there is one Top Five Global Economy that has its economics right, it's Germany.
Unlike its profligate neighbors, Germany never had housing bubble, it never lived beyond its means and 82 million hyper-efficient Germans still export just as much as 1.3 billion Chinese.
While the rest of the world -- that includes China -- has been running on the artificial high of credit expansion, Germany strengthened its position as the world's premier, valued-added exporter by keeping its nose to the economic grindstone.
No one really likes the Germans in my neck of the woods. Collective memories of WWII and V2 bombs scarring the London cityscape are surprisingly vivid even today. But even Germany's grumpiest critics can't deny that the Germans are the adults in the Europe's increasingly chaotic economic playpen. And the rest of Europe, much like rowdy teenagers dragged down to the local police station after a long drunken binge, are increasing looking toward Germany as the responsible parent to bail them out.
So it's especially ironic that investors in the world's most responsible major economy haven't been rewarded for Germany's prudence.
Since peaking at around $29 in late April, the iShares MSCI Germany Index (EWG) is down by about one third.
Here's what's worse.
Pretend for a minute this is the chart of the S&P 500, and you'll see that about $20 on EWG corresponds to about 1,120 on the S&P 500 in terms of technical resistance. And the German market sliced through that critical level on Monday, though it bounced back above that Tuesday. If you're a chart reader, that's a seriously bearish breach.
But if you look north -- and in Europe, that's always a good rule of thumb -- you'll come across a country that has been treated even more unfairly than Germany. It's an economy that has been grown faster than any other country in Europe for years, benefiting as it does from not having the millstone of an overvalued euro around its neck.
That country is Sweden.
When you say Sweden in the U.S., most investors think of high taxes, high prices and cradle-to-grave socialism.
That image is remarkably outdated. Many of the excesses of Sweden's socialism, which once saw more than half of Stockholm's "Hells Angels" motorcycle gang members on government handouts for their (wait for this...) allergy to electricity, are now a thing of the past.
Twenty years ago, the Swedes were in a bigger mess than the U.S. is today. The Swedish fiscal deficit hit 12% of GDP in 1993. But the Swedes then got their economic act together and since 1998 the government has run a surplus every year, except for 2003 and 2004. Throw in some free-market reforms and plenty of hard-won experience in successfully overcoming their own banking crisis in the early 1990s, Sweden had been one of the unheralded economic success stories of the last decade.
Yet, despite the country's successes, investors in Sweden are still being tarred unfairly by the same brush as Germany.
Since peaking at close to $36.00 in late April, the iShares MSCI Sweden Index (EWD) has fallen to as low as $24 before bouncing Tuesday. That tumble puts it still down by a head-scratching one third.
And Sweden's poor performance is even more puzzling as, unlike the Germans, Sweden is not on the hook for bailing out its Southern ne'er-do-well neighbors.
As a trading discipline, I try never to try to catch a falling knife, so I don't yet hold a position in either ETF.
But especially in the case of EWD, I know I will be tempted at some point soon.