How to manage the Greece Volatility
Written by: Ryan Bouchey
We talked a lot about Greece over the weekend on the radio show given all the headlines it’s made these past few weeks. Whether you are invested in U.S. equities or international equities, the consequences from either a Greece deal or a Greece fallout will have an impact on your portfolio. With the news and direction appearing to change from day to day – is there any way you can limit your exposure to the risk of Greece leaving the Euro? Is the risk worth worrying about? Let’s dig in to some of the numbers first…
• Greece’s population only makes up 2% of the Eurozone
• Greece’s economy is even smaller than that – 1.2% of Eurozone GDP
The news on Monday seemed to indicate that Greece would negotiate to work out a deal with its creditors prior to $1.5 million being due to the International Monetary Fund on June 30th. This is good news for Greece’s prospect of staying in the Euro if in fact these measure can pass through Greece’s parliament. This may be a struggle due to the fact that these austerity measures have a chance of hurting Greece’s economy even further. So if Greece, its parliament and its creditors can’t come to terms, should we panic over a Greece Euro exit?
Our position is that you shouldn’t panic and keep a long term focus in mind. If you look at the figures above, Greece is a pretty insignificant player at this point if you take the Eurozone as a whole. Could we see a correction in developed markets or the U.S. if Greece exits? It’s possible especially due to the uncertainty surrounding a Greek exit. Unfortunately it’s incredibly difficult to try and forecast how political negotiations will play out. With that, we don’t suggest making any major moves at this time in your portfolio. If we do see a Greek exit and stocks take a hit – it may present some buying opportunities. Fundamentally the U.S. stock market and developed markets are in a position to continue to grow long term, which shouldn’t scare you from any short term volatility we may see in the coming weeks.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Bouchey Financial Group, Ltd. [“Bouchey Financial”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, no portion of this discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Bouchey Financial. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Neither Bouchey Financial’s investment adviser registration status, nor any amount of prior experience or success, should be construed that a certain level of results or satisfaction will be achieved if Bouchey Financial is engaged, or continues to be engaged, to provide investment advisory services. Bouchey Financial is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Bouchey Financial’s current written disclosure Brochure and Form CRS discussing our advisory services and fees is available for review upon request or at www.bouchey.com. Please Note: Bouchey Financial does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Bouchey Financial’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a Bouchey Financial client, please contact Bouchey Financial, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.