As you all know we here try to get our fingers in as many pies as possible. There are some terrific bargains in the market at the moment as the Global bloodbath swings from hope to fear and back again. The whole market indeed all markets taken on a Global view are suffering exactly as you here in the UK are. What’s needed immediately is a resolution to the current Greek financial crisis which is weighing heavily on Banks/Institutions currently exposed to Greek debt.
Then there are more concerns regarding Italy which as those of you who read the papers will know has had its sovereign credit rating cut by Standard and Poor whilst keeping the country’s outlook on negative. Italy are seen as economically very weak. The sovereign debt crisis engulfing the Euro-zone isn’t going to go away and investors should keep this in mind. There’s two solutions for Greece. Default with the return of the Drachma or Radical debt restructuring. Economists are now openly debating Default which implies a huge shift in thought the once unthinkable is now being openly touted as the way forward. Of course Default isn’t the end of the world Russia defaulted in 1998 with a debt of approx’ $80 billion dollars as did Argentina with $82 billion dollars in 2001. The problem with Greece is that their debt is estimated at over $500 billion dollars any default here could be contagious to weak Euro zone countries ie Italy. (Contagion) I personally think that as more and more finance ministers begin to balk at the amount of money being pumped in to Greece that a default looks to be the only way forward for Europe.
Private Investors should keep one eye open whilst sleeping at nights. As the little guy you’ll get no warning whatsoever when/if a default comes. Remember AIM/Small cap stocks are volatile at the best of times, with a default some stocks will plummet as investors flee to safe havens. However solid companys are still good companys even in a crisis so stick with what you’ve researched as contrarians will be buying at the bottom. Eventually all returns to normal as the perpetual thirst of Institutions seeking monetary gain becomes unbearable. It will all be old news soon enough!