After Greece bailout and the agreement with Euro zone leaders about the austerity measures and the external supervision on Greece finance, the pressure in the market and Europe in general could breathe relieved. Is that true??? Well partially. For sure the agreement on releasing the bailout is a good news but we need to have at least three important subjects on our mind when thinking about our investment portfolio.
1) The first one is the fact that Greece has only about a week to approve and implement the austerity measures in order to be given the first part of the approved bailout. A fail in meeting this target would clearly shake the market.
2) Banks and financial institutes that had lent money to Greece will receive much less now than previously agreed and it was already noticed by the market in their stock values. Also they may stop paying dividends in a drastic case which would directly affect preferred stocks and/or bonds.
3) for Greece to be able to sustain the austerity measures and to promote growth in the future to their country, they would need the support and commitment of the all population, which is not happened right now (see example of Korea that lived similar situation in the past). So, in summary, even after the bailout, keep Greece in your mind and closely watch their actions, especially during this week, being conservative in your portfolio for investments that may be affected by their crisis.
