It appears that overnight, member countries of the European Union were able to come to an agreement on how to start addressing the financial crisis in Europe. The first big problem they are going to attack is the looming bankruptcy of Greece. The EU has decided to loan Greece money (buy buying European Union bonds and giving the money to Greece) and therefore giving the country time to cut spending and get its fiscal house in order and after that then they'll start to repay the money loaned.
This is awesome news because it shows that divided leaders (and countries) can come together and compromise - I'd like to see the same thing done in Washington but I'm not gonna hold my breath on that one. While I'm elated (as our the markets being up over 2.3% so far) that we are seeing signs of a possible stabilization of the problems over there, this is in truth only the first step in what looks to be a long race. There are several countries that are facing debt problems and possible bankruptcy, and we have to see how the EU is going to handle those before we can signal the all clear.
While I always seem to throw in a bit of negative when everythings coming up roses, I only do this because I'm trying to provide an overall picture of what's going on in the markets around the world, not just a one-sided view of them. So how is this affecting specific stocks? Well here's a rundown of some of the financial stocks that I own, which are the biggest benefactors of the EU financial stabilization deal.
Citigroup is up 7.31% to $33.43
Suntrust is up 6.65% to $20.69
Etrade is up 5.7% to $11.24
KKR Financial is up 3.6% to $8.27
Remember, don't get caught up in all the excitement of what's occurred overnight in Europe. I'm excited about the progress that the EU is taking, but don't throw caution to the wind. If you've been buying stocks as I have over the past month, then I would be looking to sell a small portion of the stocks that you bought at lower levels. For example, if you bought 1000 shares of Citigroup at at $28/share over the past 3 weeks, I would probably look to sell 250 shares or so and hold onto the rest.
Stock markets can turn on a dime, as they are this morning, but Europe is not out of the woods yet, it just appears that now they might be walking in the right direction.
