The following question has been raised in a comment from ritsut:
"Market commentators are becoming more vocal about Greece bombing out of Euro, have you got a strategy should the euro change in some way?"
I can't claim to have a properly thought out strategy per se should concerns over the fate of the Euro escalate to fruition.
But I do have a number of large cap European companies with global reach that I would like to add at the right price so am looking for either the current doom laden media coverage to drive down European markets or for the value of the Euro itself to better reflect the region's perceived weakness against other currencies to make my sterling funds stronger.
Beyond that, and rather than second guess the outcome, I am trying very hard to ignore the wider noise and media commentary that seems to stir up the fear and volatility acting as a day to day drag on markets.
I am still strongly of the opinion that we are in the midst of a rare opportunity to pick and mix well established, and successful companies who's resources and management will enable them to ride out this storm, probably coming out stronger and leaner.
This might not be immediately realised in their share prices but, I would expect them to go on to accelerate profits over the longer term when this extended credit crunch is eventually consigned to minor trough in the historic graph.
From a company earnings perspective, and as an investor, I am less concerned about the headline of a "recession" than I might once have been.
By the time a technical recession has been declared (2 consecutive quarters of contraction), it might already be in the past.
The real key is how companies manage their balance sheets with slowing growth prospects.
That's not to say that the effects of recession won't be detrimental to some companies (particularly in fashion fickle sectors like retailers) but I am in no doubt that it causes more pain to affected individuals and families than companies.
Unemployment is just one of the tools by which companies re-balance their costs, capacities and cashflows.
So in the main I will continue to look for companies in "relatively" resilient long term industries with good cash management. These are also likely to hold some form of competitive advantage, monopoly or global footprint.
With the US economy starting to look more positive it might prove the most profitable hunting ground for opportunities.
Recessions aside that leaves the fate of the Euro and the EU as the unknown.
As a currency the Euro has been flawed from the beginning.
If you think that the UK has a North-South divide, and/or areas of poverty and unemployment, it serves to highlight the varied effect and impact of government policies (whichever party) on different regions: jobs; taxes; interest rates etc.
I am not an economist but It seems madness to try to manage these issues over such a disparate range of countries like an artificially expanded Europe with such strongly embedded cultural traditions, and an unequal range of skills, values and industries?
When you think about it it seems amazing that it has lasted long enough to be affected by something as seismic as the current crisis but that probably has more to do with subsidies and handouts rather than an evolving together of shared goals.
I would go so far as to suggest that the make up of the Euro and the ambition of the EU has created this problem with unrealistic expectations of wealth amongst member states. Couple this with seemingly cheap easily accessible credit and we are where we are!
Can anyone successfully argue that the values, strengths, determination, and work ethic of a Germany has been replicated in Greece?
When asked I couldn't easily bring to mind a major industry in Greece apart from tourism. Although I have subsequently read that shipping is its major export industry.
In my uneducated opinion Greece desperately needs to devalue its currency against its trading partners to give it some competitiveness but it can't because it is shackled to the Euro which has held up remarkably well.
Recent history also bears this out with Iceland quickly recovering from the woes of 3 years ago and Russia's own recovery following its partial default in the late 1990's.
Having said that, one of the biggest mysteries of the current crisis for me is the relative strength of the Euro against other currencies, but this might say more about the perceived risk of contagion to overseas holders of European debt.
It would be a positive if the crisis could be contained with Greece's exit (with hindsight this should have been agreed and managed months ago) but with little sign of a tangible plan or collective political will to resolve the EU's sovereign debt problems, it seems unlikely that the EU can now fix itself.
Instead, if we, and they, are very lucky, growth will come from elsewhere to save the Euro whilst the stronger players manipulate the crisis to increase their influence and executive control.
If there is any fall-out from an implosion of the Euro, or the EU for that matter, the debts and losses will need to be absorbed somewhere and that is the crux of the problem for markets and investors.
In some bizarre mix of Russian Roulette and Pass the Parcel who will be left with it all when the music stops?
These are all macro concerns rather than company specific though.
Trade will continue (in my opinion) it is just at what level and whether this will force a re-rating of profit margins, costs and expectations due to the unknown quality of fledgling currencies from bankrupt states, and the resulting liabilities that would take place following default.
It would also be a surprise if the rebirth of any individual sovereign currency in the current situation was not unplanned, chaotic, and probably shambolic.
Of course, Darwinian like, this will still throw up "premium" companies though and one company's failure is another company's opportunity.
To summarise then, I am not looking to drastically re-position my portfolio or run for cash.
Instead I will trust that the portfolio's investments will retain strong company specific performances, continue to pay-out a relatively decent level of dividend, and come through this.
Meanwhile I hope to take advantage of the situation by re-investing dividends into more pieces of my jigsaw should opportunities present themselves.
Fingers and toes crossed anyway.
