Over the weekend, the Greek Prime Minister broke off further talks with the European Union group over restructuring its debts. The European Central Bank froze funding to Greek banks, forcing them to shut their doors for a week to prevent a widespread bank collapse in Greece. This morning, stocks in all global markets are down, albeit not much more than we sometimes experience from time to time. US interest rates are down – the bond market rally is just about offsetting the stock market decline.

Key question for our clients – does a further decline in Greece’s financial crisis pose a serious risk to our long-term investment results? Simply put…no. In the full picture, Greece is a tiny economy. Total US exports to Greece total barely $70 million per month. Compared to the overall US exports of roughly $45 billion per month, a Greek economic collapse is barely a rounding error to US exporters.

That said, there can and will be disruptions in the short term, primarily via a “flight to quality” as investors around the world shift assets to traditional safe havens. The dollar is up 2% against the Euro today; Treasury bonds are up even more. It is possible that currencies, bonds and stocks of less-established regions fall even more and that some degree of contagion takes hold.

We see this potential development not as something to be feared…but to be welcomed as it could allow us to add quality assets at better prices. We have no particular rebalancing or re-allocation planned for now, but these short-term price corrections give us confidence to continue to deploy cash into quality balanced portfolio assets.

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