Yahoo Finance Markets 'haven't seen enough pain yet': Portfolio manager
The Greek crisis may have led to a selloff in global markets worldwide on Monday. And although one portfolio manager sees potential for rougher days ahead, that could create a buying opportunity for U.S. stocks.
Greece decided to default on a €1.55 billion ($1.73 billion) payment to the International Monetary Fund scheduled for Tuesday. After failing to come to an agreement with the “troika” – the IMF, the European Commission, and the European Central Bank – Greece will be holding a referendum on the troika’s previous proposal this Sunday.
While the latest bout of uncertainty led to the worst day for U.S. stocks in over a year, the markets have yet to see a full-on correction like it did in 2011. Troy Gayeski, partner and portfolio manager of SkyBridge Capital, a $13 billion alternative asset manager, sees major differences between 4 years ago and today.
“The European economy is in a much better position today than it was back in 2011 when it was going into a deep recession,” said Gayeski. “The European Central Bank is in the midst of a quantitative easing and have stated they’ll do more if necessary to keep markets calm.”
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Gayeski also notes that most of Greece’s debt is now held by the Eurozone countries, the IMF, and ECB. Thus creditors can “withstand the blow” whereas in 2011, “it was owned by European banks and the fear is it would cascade into a bunch of bank defaults in Greece, France, etc.”
For those reasons, Gayeski doesn’t see the latest crisis causing a problem for U.S. stocks in the same magnitude as it did 3 years ago. But equities markets may get a shakeup with a “no” vote on Sunday's referendum.
“You just haven’t seen enough pain yet,” he said. “Markets are still expecting a ‘yes’ vote… If the vote comes back ‘no’ – which would basically precipitate a euro exit for Greece – you might see the U.S. down 3% to 6% and that would be a buying opportunity.”
“Right now, you’re better off waiting for a better entry point,” Gayeski added.
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