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  • How Do I Navigate The Cyprus/ Euro Crisis? 0 comments
    Mar 23, 2013 7:37 AM

    On the one hand the EU politicians tell us that bank deposits are insured. They tell us that we have a single market, with no boundaries to the movement of goods, capital, or services. That we are heading towards a "banking union." And that the Euro is irreversible. All of which is written down explicitly in law and treaties.

    But I also read that insured bank deposits might get a haircut. That there will be limits on flows of capital. That Cyprus is a special case and a unique situation (how many others are there?). That Cyprus might default and leave the Euro.

    What a mess. Something has to give. No wonder people are angry.

    But for a small investor like myself, what do you think is the best course of action?

    So far I've:

    • diversified my portfolio as much as possible (corporate bonds, various ETF's in various regions, numerous different shares, cash)
    • ensured that I have a number of suppliers for each financial product
    • no exposure to a single investment/ fund/ fund manager >20% of my portfolio
    • limited exposure to bonds of peripheral EU countries
    • very limited exposure to bank shares and bonds
    • limited each bank cash deposit to be below the 100K insurance limit
    • bought shares in large blue chip companies (mainly in Europe as I spend Euros), on the assumption that these will continue to trade and exist no matter what happens to the currency, and that custody accounts remain my property no matter what happens.
    • I remember the UK dropping out of ERM whilst I spent DEM and earned GBP, so I don't want to take currency bets.

    What else is there to do?

    Themes: Cyprus, Euro
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