3 Safe-Haven ETFs for Eurozone Uncertainty
Notre Dame's Fighting Irish may have fans singing its football praises for pounding an Army squad 27-3.
Yet the third weekend of November brought little cheer for Ireland itself, as the country conceded its need for a financial bailout.
Meanwhile, the European Union and the world at large have been desperately trying to avoid the dreaded debt scare from spreading. The problem is the sovereign debt crisis has been highly publicized for a full year.
Containment to Greece and Ireland hasn't been simple, as investors have been nearly as unwilling to risk the poor credit risks of Spain, Italy and Portugal.An optimist might suggest that there are only a handful of "PIIGS" nations whose spending desires cannot be met by the issuance of new debt. Unfortunately, many market watchers feel that they've seen this movie before, with the toxic subprime debt held by U.S. banks. Indeed, a satisfactory solution may yet emerge for the half of Europe that's teetering on bankruptcy. Then again, who's to say that the eyes of the world won't turn their attention to individual U.S. states next. One of the chief reasons provided for extreme Muni Bond ETF selling in November was the notion that Republicans might not support bailing out cash-strapped California or debt-slammed New York in the future. All of these observations aside, there are a number of key differences between the 2008 credit catastrophe and the 2010 European debt crisis. First, large corporations are far better equipped to weather economic uncertainty going forward, as scores of companies have access to their own cash or inexpensive credit in the marketplace. Second, governments presumably have more power to bail out themselves and/or one another, whereas the banks were subject to market forces for longer periods. (No judgments here; just recognition.) Perhaps most notably, the majority of stock benchmarks had questionable fundamental valuations and ugly technical downtrends in 2008; at this moment in 2010, valuations appear inexpensive or fairly valued and most benchmarks exhibit clear uptrends. Might we be witnessing yet another correction? Sure. The beginning of the next bear market? I don't see it. (Note: Either way, I protect client assets with stop-losses .)
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