Grexit Talks Could Be The Buying Opportunity Of 2015

So it looks like the Grexit endgame may be finally upon us.

I know that’s difficult to believe after all these years, but it could be make or break within days.

And increasingly, it looks more like “break” than make.

Greek premier Alexis Tsipras has been talking tough, claiming the EU is seeking “regime change” and creditors are “pillaging” Greece.

Without some concessions, a default looks inevitable.

I have some sympathy with Greece, which is being pressed to service unpayable debts to keep inflexible creditors happy.

But the immature antics of game theory expert finance minister Yanis Varoufakis make that sympathy hard to sustain for long. The motorbike-riding Marxist may have overplayed his hand.

Game Of Chance

Sympathy has run dry in the EU, which is now considering cutting Greece loose, believing it has firewalled the rest of the continent’s banking system.

That is the underlying aim of European Central Bank president Mario Draghi’s €1 trillion blast of QE.

But letting Greece slide into the abyss would also have serious political consequences, with Russia hovering, neighbouring Turkey uncertain, and a Middle Eastern nightmare unfolding on its borders.

Forcing a country out of the euro moves us into completely unknown territory. Plunging the Greeks into a state of emergency may frighten other struggling members such as Spain, Portugal and Italy.

Alternatively, they may topple like dominoes.

Risk On

Markets are understandably nervous. Today, the FTSE 100 trades at 6678, down more than 6% since hitting a 52-week high of 7,122 on 27 April.

Today’s news that the UK is out of deflation had little impact on markets whose attention is understandably elsewhere.

Investors are right to be nervous but they should also be eager, because the Greek tragedy means UK stocks are notably cheaper than a month or so ago.

Bargain Prices

After recently topping 16 times earnings, the FTSE 100’s price/earnings ratio is a more tempting 13.91 times earnings.

And the average yield on the index is 3%, while big names such as National Grid, J Sainsbury, Centrica, HSBC Holdings, GlaxoSmithKline, BP and Royal Dutch Shell are all yielding more than 5%, and in some cases more than 6%.

I can’t predict how Grexit will end, but I can tell you that it’s making some of the UK’s favourite stocks look even more tempting than they were.

The question is: are you up for a game of risk?

There are some great opportunities outside the FTSE 100 as well, including this company, that Motley Fool analysts have named as one stock poised for global domination.

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Harvey Jones holds several FTSE 100 tracker but has no other position in any shares mentioned. The Motley Fool UK has recommended shares in Centrica, HSBC Holdings and GlaxoSmithKline. The Motley Fool owns shares in Tesco. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.