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U.S. Investors Brace for a Third Bailout in Greece

"This is a George Lucas production," quips Paul Nolte, managing director with Chicago-based Dearborn Partners, referencing the filmmaker who brought six Star Wars and four Indiana Jones epics to the silver screen. "The debt hasn't gone away. It's still there. So perhaps a better analogy is that it's like shuffling cards and the joker keeps showing up."

These jokes may not be far off the mark. Both Reuters and The Financial Times separately reported Tuesday on a confidential analysis conducted by the International Monetary Fund, the European Central Bank and the European Commission that shows Greece will probably need additional relief in order to reach that debt-to-GDP ratio of 120% by 2020. Without structural reforms and any meaningful changes, that number could jump to 160% by 2020.

Put another way, this debt crisis for Greece -- the one that investors have grown tired of after more than two years -- could last at least another eight years. Suddenly, the so-called "lost decade" for U.S. stocks over the past 10 years doesn't seem like that big of a problem when investors are staring at the potential for another decade or more of wild, head-spinning volatility.

"It's a never-ending story. That's what investors are dealing with," says Nolte. "There will be another meeting or something will be coming up. There will be another bailout package. There will be another vote. There's always something to be hanging your hat on when it comes to Greek and European issues."

That reality struck investors on Tuesday. The Dow Jones Industrial Average briefly regained the 13,000 level Tuesday for the first time since May 2008, months before the collapse of Lehman Brothers. The follow-through was lacking, however. "You're not getting that violent reaction we usually see," Nolte says. "This deal would be worth 300 points to the upside. We were lucky if we got 20 points."

So how should investors prepare their portfolios against the threat of yet another drawn-out drama that results in another last-minute Greek bailout? For now, both Stone and Nolte note that it's tough to bet against any scenario where central banks are working in coordination with each other.

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