Trading strategies when Greece defaults
Since we are so close at watching a EU country defaulting and things changing thereafter, I would like to put forward few ways in which we can save our money or even profit from the crumbling Greek economy:
1. Sell Swiss Franc: With default of Greece, deutsche mark would become very strong currency and people will sell franc, which they consider to be a safe heaven as of now, and but German currency.
2. Buy US Dollar: Euro was supposed to be the strongest contender of US Dollars till now but all that has changed now. Failure of EU means dominance of US dollar as world’s reserve currency would continue for several years now.
3. Sell German export company stocks: Deutsche Mark would be a strong currency which means German export companies profits will be badly hit. It would take some time before companies adjust to new environment or shall I say old environment.
4. Buy specific stocks of peripheral European countries: Currencies of peripheral European countries will be dirt cheap which will lead to cheap manufacturing for exports and cheap luxury products which will increase their demand and help in growth. Cheap currency also mean a boost in tourism as southern Europeans and rest of the world would holiday in these countries without shelling much.
5. Sell Bank stocks of US and Middle East: For very obvious reasons, banks stocks would hit as the Greek default would eventually lead to payment by US and middle eastern banks which have high exposure to Greek debt currently.
6. If you are optimistic that Greece will not default then I have a suggestion for you; buy Greek Bond. There are two benefits if your bet is right: Firstly, it will give you almost 25% return in a year and secondly, you will do your part of bailing out Greece.