Greece ‘Deal’ Talks Fall Apart, Will Stocks Follow Suit

It has been only 36 hours since we experienced a huge rally in stocks on the back of the positive news out of the Greece ‘talks’–Merkel was ready to do a deal of sorts.  Now all parties have walked out of the talks and headed home–no surprise to us at all.  Remember that Greece has until the end of the month to wrap up an agreement (and if they don’t do so they will just extend various deadlines a week–or a month).  Will fickle investors–or the smart folks on Wall Street, sell the market tomorrrow? Do we care? Of course we have a passing interest in the answer to this question, but we are neither buying or selling on the news–we don’t really have an interest in being whipsawed by silly folks in Greece (not that this isn’t a important issue, but are there bigger clowns in government than those in Greece?–excluding U.S. politicians).

On Interest Rates

Interest rates continue to move sharply up and down–we start the week at 2.38% then head to 2.5% and now back down to 2.38%.  Strange, confused markets (or maybe it is just me who is confused).  We did do some further reading tonight and there are some scary ‘stories’ out there (everyone has a story), many dealing with the lack of liquidity in the bond markets as dealers no longer carry much inventory and mom and pop investors continue to pile into bond funds–like sheeps to slaughter.  These funds have mostly been losers in the last year and may end up with heavy losses before this year is out–this is a case of leverage cutting both ways.  We all know that leverage is wonderful on the way up, but will butcher you on the way down–sharpen the knives.

Other

We are absolutely loving our 2014/2015 Short/Medium Duration Portfolio, but we are now considering a spin off Portfolio–one which will contain a large portion of this portfolio, but additionally have other asset classes included.  We shall see where this thought goes.