NYSE, Greece, China - No Particular Order

Obviously we have received some inquiries regarding the recent market news of Greece, China and the NYSE. Should you do anything? The short answer...Nope.

First, let's remember, you are an investor. You are not a trader. There are some opportunities in China and Greece but with those opportunities comes more risk than any of you need to take on. Just ask traders who made bets on Greece a few weeks ago. Or, you can ask traders who have been buying on China's dips. Better yet, ask people who invested in Puerto Rico bonds. Ouch. 


I don't use the term "crash" lightly but China's market has crashed. This is a risk with all markets but it is more of a risk in a still developing market. As far as China has come the past couple of decades, it is still developing. Our clients' direct exposure to China's equity and debt market is very minimal. Our bigger concern in regards to China actually pertains to earnings and outlooks for US companies. Earnings start next week and we are expecting mediocre to negative reports. China is important to the global marketplace. They can consume with the best of them and when they don't it hurts some US companies. With this said, we are not recommending any changes based on this information. 


Honestly, we just want it to be over with. It has dominated the news cycle and for so long that we believe most of the negativity is already built into the markets. European markets have actually had a pretty good year compared to its recent history. The EU is committed to their quantitative easing program and we like the space for the foreseeable future. We are, of course, keeping an eye on the contagion risk (a new popular term in the media that basically means "fallout"). There is likely to continue to be volatility in the European markets but volatility doesn't mean its a bad place to be.

NYSE Trading Halted

As I right this, the NYSE has been closed for over 3.5 hours. The only thing it has done is given us a break from the Greek news. The NYSE is the most well know exchange but stocks still trade even without the NYSE. Barring news of it being a cyber attack, we don't view this event as being much of an event at all. As to the question of it creating any opportunities to buy because of a dip...not for you or us. Maybe the high frequency trading shops can exploit something. 

In Conclusion

Globally, markets have seen relatively great returns since the middle of 2009. A market correction of 10% or so may be over due. Corrections are a good thing. They keep the markets healthy. When a correction occurs it usually helps expose bad investments. The strong companies and markets come back from corrections and separate themselves from the weak. Corrections tend to happen during periods of negative news fueled by poor earnings. A correction is NOT a reason to change your strategy. As Peter Lynch once said, "far more money has been lost preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves." 

If there are grammatical error, we apologize. We were focused on getting this out as soon as possible.