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June 30, 2015 at 11:19 AM
It’s what every investor is talking about: Greece.
On Tuesday, four market experts around the U.S. each commented on Greece’s debt crisis and what it could mean for investors.
It’s been a swift downfall of events leading to Greece missing a 1.6 billion-euro loan payment due Tuesday to the International Monetary Fund.
Greek prime minister Alex Tsipras’ announcement of a referendum was followed by the Eurogroup announcing that the program of financial support due to expire on Tuesday would not be extended.
Then, the ECB announced that it will not increase the lifeline emergency funding that has largely funded depositors’ withdrawals from Greek banks.
Following that, the Greek banks and stock exchange were closed on Monday and will likely remain closed all week. And, in response, the global markets roiled on Monday.
Meanwhile, Tspiras requested a new, two-year deal from the eurozone on Tuesday afternoon, only to be shut down by Chancellor Angela Merkel of Germany.
On Wednesday, Tspiras agreed to its creditors’ terms, but with some conditions. It is unclear whether the referendum will move forward.
Here’s a roundup of what the global macroeconomic experts are saying:
James Shelton, Kanaly Trust
For James Shelton, chief investment officer of Kanaly Trust, the situation in Greece is very much a “sit and wait” situation.
“I suspect that they are going to find some way to find some sort of an agreement that gets the situation taken care of for a few months,” Shelton said during a phone call with ThinkAdvisor. “Or, you could just as easily have no deal, a default, and maybe Greece gets kicked out of the euro.”
What Shelton cares about is how this affects the U.S. and global markets.
“It’s likely to have little impact, certainly on the U.S. economy, and I think they’ve been working in Europe to isolate this to Greece so there’s not any contagion to other countries,” he said.
His advice right now for clients is to “don’t do anything and see how this plays out over the next few days.”
Kanaly Trust, which runs globally diversified portfolios of several different asset classes, has built into its diversified portfolios some assets that will help cushion the downside of global equity markets, according to Shelton.
“If your portfolio is constructed in that way, I don’t think there’s any reason at this point to do anything with your portfolio and quite frankly I don’t think you need to be all that concerned,” he said.
He does say that investors with significant exposure to Europe, and especially European financials, may have reason to be concerned.
“In a default scenario my guess is that European financials in particular are going to go down,” he said. “But, absent that, if you’ve got a diversified portfolio, I would sit tight.”
Shelton does see positives coming out of the Greece situation.
“If there is a default and we see global stock markets sell off a little bit I believe it’s going to be more of a buying opportunity for the longer term investors,” he told ThinkAdvisor, adding, “If on the other hand there is a last market deal and the markets have a relief rally … we will have removed one of the big risk factors out there and it will probably make a lot of investors more comfortable in investing in the equity markets.”
