Greece crisis feels like Y2K (no big deal) all over again

Market crises don’t have clever names in advance; they don’t happen on a schedule.

That doesn’t mean investors shouldn’t be nervous about recent and current events in Greece, but they should also recognize that the potential Grexit — Greece’s withdrawal from the Eurozone — is just the latest in a long line of events where the market outcome is unlikely to justify the massive headlines and news coverage.

In the end, the Greece situation is more likely to be something of a footnote on a stock market timeline, akin to the “Mexican peso crisis,” (1994-95), the Orange County bankruptcy (also ’94), the “Asian contagion,” (1997), Y2K (duh), the fiscal cliff (2012) and countless others.

Yes, the next real crisis is out there percolating somewhere, but investors aren’t likely to see it coming, or to at least recognize the triggers and catalysts in advance.

By comparison, Greece has been a slow-motion train wreck, where you can see it coming in such great detail that there’s no real room for surprise.

Knowing what you are up against is key in deciding whether an event should catch an investor’s attention from afar — watching the news — or up close, directly affecting their portfolio.

Any investor who has had significant exposure to Greece since 2010, if not earlier, should have fully understood the risk that the country might not be able to pay its debts. Anyone just waking up to the depth of the problems now — especially when this is at least the third time Greece has been on the verge of exiting the Euro — has been naïve.

Thus, there is no surprise here for people with real exposure, and shock, wonder or bewilderment are a big part of the different between a headline event and a market bombshell.

In 2008, for example, plenty of people saw troubles mounting in Lehman Brothers and other key financial players. Former Federal Reserve Chairman Ben Bernanke had said in 2007 that the sub-prime issue was contained.

The surprise, recalled Jeffrey DeMaso, director of research at Adviser Investments, was that “everyone ‘knew’ the Fed had Lehman's back until, all of sudden, it didn't. Bang! Investors and traders are caught way off guard.”

Greece isn’t catching anyone by surprise; this week’s deadline for repayment to the International Monetary Fund had been on the calendar for months.

“Greece has been happening for five years now, and most of the impact has already been mitigated, and will be unless something comes out of the woodwork that no one can anticipate,” said Jim Welsh, portfolio manager for the Forward Funds. “So instead of looking at the headlines, look to see if there is something happening that no one is talking about.”

Currently, for example, that would mean worrying less about interest rates in Greece than in nations such as Italy, Spain and Portugal. Those rates, though up slightly this week, haven’t been making headlines, and haven’t been showing any signs that Greece’s sneeze is becoming Europe’s cold.

That’s not to say investors should be complacent about headlines, but rather to say they should not be ruled by them.

The bulk of headline events become those largely forgotten, sometimes amusing footnotes to market history. Even some of the surprise natural disasters — hurricanes that hit the American South in the early 2000s or the Japanese tsunami in 2011 — are more likely to be temporary dampers than catalysts for market collapse.

In the eyes of many investors, that actually makes those scenarios buying opportunities.

There are, however, those times when the market drops — and remains troubled — around a big event, reinforcing investor notions about their ability to spot trouble coming, leading them to be more wary the next time there is any sort of event-driven market action.

But most investors, if they are honest about their own history, can come up with a raft of past crises that at least had them wondering whether it was time to change course and alter their portfolios, and most of those items wound up being non-events when it came to long-term results.

Said Jason Browne, chief investment officer at FundX Investments: “My sense is there is always a date/event we worry about. To me, the reason is that we want to think there are predictable reasons why markets go up and down and, after experiencing big drops, we are always looking for the trigger for the next one.”

No matter how scary the headlines, here’s the current reality: No one in their 40s today is going to reach retirement age in the 2040s and feel like they have to work longer because they mismanaged their portfolio during the Grexit.

For average investors, most headline events are interesting to read about, but not worth making portfolio changes over. It’s not that the Grexit should be ignored by investors — because that would increase its potential to surprise people — but rather that anyone who feels nervous now, at this late juncture, needed to pay attention sooner, and anyone who followed the story over the last several years was prepared for this.

“Everybody is out there looking for the big event, and there are some people who actually invest that way … but from a research standpoint, we think that’s not the best way to make most investment decisions,” said Seth Masters, chief investment officer at AB Global. “While we use particular headlines as shorthand for describing the cause of things, there’s many that turn out not to be as big a deal as the size and font of the headlines suggest. I think the Greece situation will be one of those.”

Karl Mills, president of Jurika, Mills & Kiefer, noted that the current Greek crisis falls under the heading of “failing to unexpect the expected.”

“That’s where we so thoroughly anticipate something — while at the same time completely blowing it out of proportion — that the actual event fails to amount to much at all,” Mills explained. “It is rarely the monster you see that kills you, but the one sneaking up behind you, when you feel the coast is clear, that does you in.”

Chuck Jaffe is senior columnist for MarketWatch and host of “MoneyLife with Chuck Jaffe.”