This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Setting Up a Eurozone Plan

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( ETF Expert ) -- The troubles in Italy, Portugal and Greece are shockingly serious. How serious? Many insist that these three little piggies will eventually succumb to disorderly bankrupties, causing Armageddon for world stock markets and the global financial system.

For the doomsday crowd to be right, however, everything has to go wrong. Ev-er-y-thing!

For instance, coordinated eurozone plans for aid to Greece would have to go completely awry. Simultaneously, Italy would have to fail at every turn to shore up its balance sheet; then, the country would have to be turned away by European policymakers because Europe wouldn't have the capital to "bail out" Italy.

> >> Bull or Bear? Vote in Our Poll

Of course, China would have to forgo its own well-being by sitting on the sidelines. For that matter, all of the other nations in the world -- Germany, Japan, the U.S, Russia, Brazil, Switzerland, the U.K., Australia -- would have to stand idly by as a "sovereign debt crisis" decisively destroys the global economy. And this sounds likely?

Financial markets may or may not panic if Italy drops the ball. Yet the rest of the world's sovereignties, albeit grudgingly, would certainly pick the ball back up off the floor. Indeed, Italy is "too big to fail," which is precisely why it won't.

So what can volatility-weary investors do? Have your own personal eurozone plan. Specifically, use stop-limit loss orders on your holdings to reduce the risk of any one asset becoming a hopeless liability. If you're not comfortable with actual stop-limit loss orders, employ key moving averages (trendlines) as part of your unemotional sell discipline.

If you still believe you're overexposed after stop orders and trendlines have raised your cash level, draw a simple line in the sand. Perhaps you would choose the October stock market low ( S&P 500 at 1097). If it doesn't hold, neither do you.

Although I have a plan for dealing with disaster, I don't believe we're heading back to the October lows. China will declare victory over inflation in the near future, allowing for an easing of fiscal and monetary policy. The European Central Bank (ECB) has no choice but to reduce rates too.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AMLP $16.55 0.00%
GXC $94.53 0.00%
SPLV $37.35 0.00%
AAPL $130.28 0.00%
FB $79.19 0.00%

Markets

DOW 18,010.68 -115.44 -0.64%
S&P 500 2,107.39 -13.40 -0.63%
NASDAQ 5,070.0260 -27.95 -0.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs