What the experts say

How to play the euro crisis

How the eurozone crisis will end is anyone’s guess, but American investors can limit their risk with a few basic strategies, said Michael Sivy in Time.com. First, minimize your debt and lower your monthly expenses. In your portfolio, “maintain a cash reserve” and keep an eye out for stocks in “companies with little debt, solid long-term business prospects, and current yields above 3 percent”—they’re likely to look cheap in a few years. It’s also wise to keep some money on the side to “buy opportunistically” in case the eurozone implodes. In particular, “exchange-traded funds that invest in Germany and the Netherlands” will be good buys at temporarily bargain levels. Finally, consider buying real estate, especially if you rent. Home prices in many areas remain cheap, and buying now will give you “a valuable inflation hedge.”

Doing your IPO homework

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Groupon recently enjoyed an impressive market debut, and more than 200 companies are in the pipeline behind it for initial public offerings, said Dave Carpenter in the Associated Press. But amateur investors should beware of IPOs, because “it’s easy to get burned.” If you jump into the fray, make sure to “learn the lingo” first. The “aftermarket is where most investors buy shares” after insiders get first crack at the lower offer price; a “red herring” prospectus lays out the company’s business plan; and a “greenshoe option” is the underwriter’s right to sell more shares than planned. Don’t worry so much about a company’s pre-IPO income losses; focus instead on the trajectory of revenue or sales. And buy-and-hold investors should avoid IPOs altogether, “because in the long run they underperform the market.”

Don’t pass up free advice

More 401(k) plans are offering investment advice tailored to participants’ specific needs, but only about a quarter of eligible employees “actually take advantage of it,” said Karen Blumenthal in The Wall Street Journal. That’s too bad, because surveys show that investors “increase their savings [and] diversify their holdings” when they get formal guidance. Many 401(k) providers have recently upgraded their free investment consulting services. TIAA-CREF, for example, offers its 3.7 million participants one-on-one advice for no charge. And many plans offer online recommendations based on your personal profile.