Greek PM Drops Referendum Plan: What Investors Need to Know
What's happening in the headlines can affect you as an investor. Here's what's going on, what you need to know, and what you should do.
The cold, hard, ever-evolving facts
The Financial Times is reporting that Greek Prime Minister George Papandreou is reversing his controversial decision to hold a referendum on the embattled country's $180 billion bailout package.
The decision to hold a referendum, announced only days ago, stunned the world. The bailout package had been concluded after much long, arduous debate only the week before, and Papandreou's surprise call for a referendum to let the Greek population vote on whether to accept the bailout terms sent equity markets on both sides of the Atlantic into a tailspin.
Under extreme pressure from French President Nicholas Sarkozy and German Chancellor Angela Merkel, and the immediate threat of losing an $11 billion loan from the EU, the Greek prime minister has scrapped the referendum plan.
What you should do
The news is being welcomed by investors, as equity markets in Europe are already rallying. The Dow (INDEX: ^DJIA), S&P 500 (NYS: SPY) , and Nasdaq (INDEX: ^IXIC) rose considerably today.
The only thing the market hates more than a certain downside is a certain downside with no bottom in sight. So with Greece seeming to be back on course to receive its rescue package, although it's no ultimate guarantee of anything, at least there's some sort of floor in place again, giving fearful investors something to feel OK about.
As always, Foolish investors like yourselves don't get caught up in the day-to-day gyrations of the market, but it never hurts to keep your eye on the big picture. So for right now, as long as the companies you own have sound fundamentals, hold onto your stocks, as well as your hats, and we'll just have to wait and see where this eurozone-crisis ride takes us.
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At the time this article was published Fool contributor and newshoundJohn Grgurichloves his Reuters feed so much he wants to marry it, but he owns no shares of any of the companies mentioned above. The Motley Fool has sold shares of SPDR S&P 500 short. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has a scintillatingdisclosure policy.