Gore Capital Management - Recent Market Turmoil Stance
July 13, 2015
The crisis in Greece has dominated the headlines, and at this point, the Greek people will feel tough times regardless of whether Greece leaves the euro or agrees to a payment plan. However, we believe that either outcome will actually be positive for the markets. Investors dislike uncertainty above all else, and a resolution to the Greek crisis will provide investors and analysts a bit of closure. As of Monday morning, Greece has agreed to a new bailout deal which will allow them to stay in the Eurozone for the time being. Despite the positive news, this situation has unfolded in a rather unpredictable manner, and there’s no guarantee that we are out of the woods just yet. At this time, we still feel that the European equity market represents an attractive investment.
Additionally, we have heard consternation over the sharp and dramatic decline in the Shanghai (China) stock market. It is important to note that an estimated 1% of mainland shares (which are denominated in yuan) are held by investors outside of China. This low level of outside investment has shielded foreign investors from the most extreme volatility. Also, even as China slows, its economic growth continues to outpace the rest of the world.
Finally, the temporary halt of the NYSE last week was a bit of a surprise. Headlines (which carried no basis in fact) suggested that the technical glitch was a result of a nefarious network hack. The reality is much more mundane; a routine software update went awry, causing some ones and zeroes to get mixed up. Like all technology, computers are not perfect. As long as such errors can be corrected quickly and without tremendous disruption, we will not be terribly concerned.
While the headlines have been alarming at times, we haven’t found compelling reason to shift our current portfolio positioning. However, we are staying alert to any changes that need to be made but more importantly to any opportunities that this volatility might offer. As always please feel free to contact us with any questions you might have.