Stocks fell early and often Tuesday as the situation in the eurozone continued to deteriorate.
The Greek Bailout 2.0 plan is being jeopardized by weaker-than-expected participation in the country's debt swap offer and fears that its failure would result in €1 trillion in losses for European banks. Also adding to concerns is word that Ireland could require a second bailout package -- something that might not be forthcoming if the Irish reject a strict new fiscal austerity pact.
The result is what's set to be the worst market performance since December and the breaching of significant technical support levels. By all indications, the losses are just getting started.
Here's how you can profit from the emerging downtrend.
I've already said a lot about the intractable problems being faced by Greece, so be sure to review my recent blog posts. Overall, the country is headed toward a "hard default" -- the first in 60 years for a developed country -- and a very likely exit from the eurozone. By restoring its national currency, Greece can promptly devalue it and restore its economic competitiveness by making its exports and tourism industry more attractive to foreigners.
The problem of Ireland is a new wrinkle that has taken the market by surprise.
And as a result, people are selling and selling hard. In the process, a number of important foundations of the post-November uptrend are getting whacked:
For nimble traders looking to get in on the action, emerging market stocks is the latest group to roll over and suffer from a bout of severe underperformance thanks to safe haven inflows into the U.S. dollar. When the dollar does well, foreign stocks and commodities tend to suffer.
Monday, I added exposure to this by including the ProShares UltraShort China (FXP) in my Edge Letter Portfolio. Existing positions include a short in AKSteel (AKS), up nearly 17% since I added it on Feb. 14, and a short in Mechel Steel (MTL), up 14.2% over the same period.
For long-term investors, the best strategy would be to move to cash and wait out the storm. If that's not possible, I recommend a rotation into utilities and consumer staples -- areas that tend to limit their losses in situations like these. Examples include Duke Energy (DUK), which offers a 4.8% dividend.
Check out Anthony's investment advisory service The Edge. A two-week free trial has been extended to MSN Money readers. Click here to sign up. Contact Anthony at anthony@edgeletter.com and follow him on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.
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Well, more and more of the "experts" are finally beginning to realize that Greece might just default on it's debt! Any economist with common sense knew that the bailout package that went to Greece was severly under-funded. It bought Greece a little bit of time, but did not help resolve it's debt. But wait, folks, this is just the beginning of the story--it get's a whole lot worse!
Greece isn't alone! Here is the complete list of countries IN debt crisis or ALMOST in debt crisis: Greece, Portugal, Slovenia, the United Kingdom, Latvia, Ireland, Spain, Lithuania, Belgium, Estonia, Italy, Argentina, Ecuador, Cyprus, China, France, Malta, the United States, and Slovakia. When the debt crisis ball starts rolling, get outta the way!
Hey monte59:
I bought my first home in 1973 at 7.75 percent mortgage. Another home in 1985
at 10 5/8 percent. All painfull, but man will survive this and any other crisis
that is thrown at us. That is life, a new normal every day you wake up!!
Every little move this market has made in the last 2 years is based on the news coming out of Europe, Greece, Italy, Spain, Ireland.... These Countries are just a drop in the bucket to the problems the Untied States have on their plate....All these European countries have survived because we have bailed them out......Who's going to bail out the United States?
People keep talking about precious metals as what will get you thru the storm...
Not in my Opinion...........It's time to stock pile Food, Water and Ammo!
Don't give Anthony a hard time. He is using technicals to try get get better than 50/50 odds of making money. He doesn't and none of use average people have a crystal ball to forecast the future.
Good luck to all in these uncertain times
sell everything, buy that boat and find gilligan's island. you thought 2008 was bad, just wait until 2013.
all you can do is pay off everything you can now. there is nothing that is a safe investment.
BTW,my dear friends,if you are looking for a rich partner,just check it out or tell your friends.
I predict a lot of you gamblers (those still in the delusion that you're smarter than the average bear and will make profits this spring) are going to have deep and nasty knife gashings in the palms of your hands. Why, from grasping at falling knives.
Don't say you weren't warned.
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