This story from MarketWatch’s London bureau intrigued Outlaw.
First, they introduce the subject and convince you that Greece will, indeed, default within the next year or so: “You don’t exactly need a crystal ball to know what the biggest event in the financial markets of the next 12 months is going to be: Greece defaulting on its debts.
This week Standard & Poor’s cut its rating on the country to CCC, the lowest of any nation in the world. Only last week we learned that Greek industrial production was down 11% year-on-year. Unemployment has risen 40% over the past year, and now stands above 16% nationally. A year on from the European Union and International Monetary Fund ‘rescue,’ Greece is slipping into 1930s-style depression.”
But how to profit?! “Forget all you’ve read about it being a catastrophe for the markets when it happens, however. Only things that nobody really forecast make prices move in any dramatic fashion. A Greek default is about as unexpected as Rafael Nadal making the finals at Wimbledon this year.”
Only a Brit would compare the dire economic collapse of a nation to Wimbledon.
OK, but seriously, here are the reporter’s interesting suggestions for how to blissfully profit from Greece’s misery:
1. He suggests buying German bunds, and selling anything you have in the DAX index. Reason: “The new deutsche mark that will emerge from the wreckage will be one of the strongest currencies in the world.” Agreed; the euro will soon fall apart.
2. Sell the Swiss franc — for the same reason. Investors will have the deutsche mark again; the Swiss won’t hold the ‘monopoly’ on a strong European currency any more.
3. Sell the Belgium index. (Ha, as if I would ever buy anything in the Belgium index to begin with… I’m a US investor, not a European equities collector.)
4. Buy European travel companies, and also sell U.S. bank stocks (I disagree, but OK). He also suggests buying the U.S. dollar.
I obviously don’t agree with all of his strategies, but it’s still an intriguing piece — and I’m sure at least one or two of these approaches will make investors good money, assuming Greece isn’t saved.
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