More on Greece

As of 12:30 p.m. today (CST), the U.S. Stock market (as measured by the Dow Jones Industrial Average) was down approximately -1% for the year and -3% from its all-time high earlier this year. While negative movements are never enjoyable, we keep in mind that a “stock market correction” is defined as much stronger movement, often a decline of more than -10%, or -20% in the case of a bear market decline.

The European stock market (as measured by the FTSE Europe) has been a high flier during 2015, posting a gain of approximately +12% at one point. Ithas fallen approximately -10% from that peak, retaining an approximate +2% gain for the year. Despite the drop from its high, the European stock market is still not in “bargain” territory, but we are watching for that possibility. The same is true for the U.S. stock market; even with recent movements, by our measure, it is still overvalued, well above “bargain pricing.”

With regard to Greece, we keep in mind that it is only about 3% of Europe’s overall economy. No matter what Greece and Europe decide, more Greek debt is going to get forgiven or written off and the Greeks will go through painful transition. Yet, as we look to the mid- and longer-term, we believe it is healthy that the “debt question” of all EU member nations be fully debated and addressed. It is unlikely that the EU will be stable if some member nations feel they are consistently subsidizing other member nations, unless there are offsetting benefits such as a desirable market, access to resources or laborpools.

If you’d like some further thoughts on Greece from Jeff Saut, Raymond James Investment Strategist, please see his write-up.

As always, please let us know your questions and comments.