Financial Times
July 22, 2011
How should a private investor prepare for the Greek government’s probable default on its bonds? It’s a tough question, because the fallout from any market-driven default by the eurozone’s weakest member is likely to spread much wider than the bond investments themselves.
Of course, where prices fall without good reason, that will create value opportunities. However, the lessons of the global financial crisis were certainly that investors should not be in too much of a hurry to take advantage of apparent ‘bargains’, as the ramifications take time to play out. Still, that’s no reason not to have spare cash to hand, so I have upped my cash holdings by a couple of per cent, with more to come.
Some of my recent selling has been precautionary. My portfolio was already pretty defensive, but I didn’t want to leave any hostages to fortune.
I don’t own any government bonds and, since 2008, I haven’t owned any ordinary shares in banks, either. That puts me at one remove from the initial fallout.
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