The European continent is an ocean away from the United States, but Europe’s debt crisis may hit close to home for U.S. investors.

Your investment portfolio almost certainly contains some exposure to Europe. You could own European companies through investments in international funds, or you may be invested indirectly through multinational corporations that do business in Europe. Moreover, if the European debt crisis worsens, that could lead to increased volatility in U.S. and global investment markets.

You’re also affected because Europe’s economy directly affects the U.S. economy through bank lending, trade, and other economic connections. Europe is the largest U.S. trading partner, accounting for 20% of U.S. exports. At the same time, U.S. banks hold a lot of European debt, and worries about Europe’s economic health have already dampened business investment and hiring in America.

Some analysts believe the credit crisis in Europe has been contained and that further impact on world markets should be minimal. Others continue to warn that Europe’s problems are likely to send the global economy into another recession this year.

Either way, it’s vital for investors to take into account events in Europe and position their portfolios accordingly. We are watching the debt crisis very closely and we can help you take a proactive stance.

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