The Greek Election and Your Portfolio

Now that the anti-climatic Greek election is hours behind us, we can now turn our attention back to the U.S. market and making money. Or at the very least, not losing money.

The situation in Greece is still a mess. Just because the country will stay in the E.U. for the near-term it does not make the mess go away. If the New Democracy party would have lost yesterday it would have sent the markets much lower instead of flat (as they are midday on Monday). Many expected the market to rally on the news of the New Democracy victory on Sunday night, but as I was broadcasting live late Sunday I made it known that traders would sell into the strength and they did just that on Monday morning.

I do not want to get into the specifics of the Greek situation, but I want to cover briefly what the situation in the E.U. means to your portfolio.

• Expect more volatility for the remainder of the summer as Greece attempts to put together a government and Spain deals with yields above 7.25%.
• In the near-term the news out of the E.U. (other than Spain) could slow, thus putting the emphasis on the U.S. economic numbers. They are mixed with the government numbers trending lower, but U.S. corporations are doing well. This makes it difficult for investors cannot disconnect the two. Long-term investors must look at solid companies as well as diverse ETFs.
• If the Spain yields continue to rise and the rhetoric out of the E.U. does not improve expect a coordinated effort by central banks around the globe to inject liquidity into the markets. This will result in stocks and commodities rallying. The odds of this happening are approximately 70%.