There's a lot being written about the Greek debt crisis right now. It's scary, it's problematic, and, for the most part, almost totally unusable for the average investor.
That's completely unacceptable as far as I'm concerned.
So I thought we'd take a good hard look at what you actually need to know, then move on to three tactics that can help you capitalize on the situation. And I don't just mean by single digits, either.
The last time we saw this crisis-driven setup, savvy investors who followed along had the opportunity to take home returns of at least 245% by jumping a stock that would thrive under the circumstances.
Here's what you really need to know.
Greek Debt Crisis Headlines Add to Horror AND Set Up Your Opportunity
There's no doubt the headlines are scary. I took a quick spin across the Internet a few moments ago and this is just a fraction of what popped up:
- Europe Is Urged to Prepare for Greek Default as Stances Harden on Debt Deal – The New York Times
- Greece on "Brink of Disaster" as Talks Fail Yet Again – CNBC.com
- Greece Crisis: PM Blasts "Criminal IMF" in Defiant Speech – The Guardian
Blah, blah, blah.
Keep in mind that the mainstream media's real job is to sell sensationalism and that the Internet simply exacerbates the situation by creating a digital feeding frenzy of sorts.
A little perspective goes a long way, especially now.
Consider: Apple's valuation of $735 billion is more than triple Greece's entire annual GDP of approximately $240 billion. Exxon brings in 10 times more cash in revenue than the Greek economy creates in a year. Letting Greece go would be for the EU what letting the Florida Keys go bankrupt would be for America's $17 trillion economy – an unpleasant hit for anybody who lives there, but by no means a game changer in the long term.
Second, the ECB has been preparing for exactly this contingency for months, despite the fact that politicians have been jawboning about solutions and agreements incessantly. Chances are they've done their homework at this point.
The European Stability Mechanism intended to backstop a Greek default is in place. Whether Greece leaves or gets kicked out really doesn't matter at this point. The country lied about its finances to get in, terribly mismanaged things along the way, and, in reality, has done very little to pay back what it owes. Speaking very plainly, it's not like there's a cash spigot that's suddenly going to get turned off.
And, third, Greece is still going to be part of the EU even if it leaves the euro. That means the nation will be eligible for "balance of payment" assistance from Brussels just like Latvia and Hungary, for example.
Locally, here's what will happen on the ground, though.
Join the conversation. Click here to jump to comments…
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.
Greece has to get control of it's banks, free itself of imf crooks. see (money creation) and (ann emmett pt2)
Hi Keith,
I was looking at this only last night. I saw a recent chart for the National Bank of Greece and was horrified when I realized that shorting the stock 2010 with LEAPS dates 2-3 years out would've made someone an absolutely killing! This is what I was researching – sadly too late.
The stock currently trades at $1.10 so they certainly isn't much room left to run the short side. Basically January 2016 $1-1.50 puts have about a 50% upside.
I have two questions for you.
First, do you think that NBG has any chance of going all the way to ZERO?
And second, should the EU/IMF actually pull Greece back in with another tranche of money, do you think there's much potential for the upside?
Looking back over all the spectacles the began around 2010 – each rescue loan lead to a strong recovery in the bank stock. Calls dated for January 16 and January 17 are actually very cheap in the strike prices that range from four dollars to eight dollars. I'm just curious if you think there could be any golden opportunities in this equity?
Thank you and best regards,
James
PS
If Greece falls other nations are sure to follow. Do you see any names that would rival the fall of NBG in the future for countries like Italy, Portugal or Spain? If so, what?
Thanks again!
James
I'm very curious to know about when i can do the money exchange,due to i have a decent amount of Dong currency that i really need to be profitable can you please help me to understand. These situations and all the abbreviated info here
Good call on the WMB! Put all of my stock funds into that and i saw a return of 25% within a day! Now the real question is, do I hold on to it, or sell now
I have a question for the author Keith Fitz-Gerald. Please could you explain your graph comparing pre and post euro growth? As the currency has changed I am not sure how directly comparable they are – so what was done to make the comparison valid? Thanks S
Hi Sarah,
Thanks for reading Money Morning. That's a question for the IMF World Economic Database Team which ran the numbers. My understanding is that it's a simple GDP calculation year over year not a currency iteration.
Keith
Hi Keith,
What financial instruments do you think will be advantageous to buy/sell in this Greece Crisis?
-Fabian