The question of the day is Does Greece Matter? While much uncertainty remains after yesterday’s election, the simple answer to that question is No, Maybe and Yes.
No because Greece is not going to be the world’s next “Lehman” and precipitate a world-wide financial meltdown. Europe will be more directly effected than we will, especially if Greece exits the Euro, but I think European leaders are prepared to erect financial walls to prevent a contagion.
Maybe – if any only if – other Southern European countries like Spain and Portugal follow in Greece’s footsteps and default on their loans. While possible, I don’t think this is likely. But certainly something to look out for.
Yes not because of Greece being that important in and of itself, but because investors are nervous and looking for an excuse to sell. Remember, perception is reality. We are in the midst of the third longest bull market in history, and most of us are just waiting for a normal bull market correction (which of course will present a great buying opportunity).
Greece – or perhaps the Fed – or both together – may provide the “excuse” to finally ignite the fuse. Make sure that your clients understand this, and provide them with the insight to separate the wheat from the chaff. The summer months are usually bumpy ones in the market, and expect this year to be no different.