It's gut-check time for investors. Again.
Two potentially tumultuous weeks loom in the European debt crisis, kicked off by Greek elections on Sunday. Once the two weeks are behind them, investors still face a stretch of slow _ or no _ growth in the global economy that could last for years.
Market momentum has evaporated in recent weeks, causing many investors to recall last summer's alarming dives when the debt-ceiling stalemate in Washington took hundreds of points off the Dow Jones industrial average. Concern over a widening of the European crisis only heightened this week as Italy and Spain saw their borrowing costs surge.
There's even been some uneasy chatter among investors about whether the potential exists for "another Lehman Brothers" _ a reprise of the financial firm's collapse at the heart of the 2008 financial crisis, with Greece playing the role of Lehman, perhaps to be joined later by Italy and Spain.
It all has many average investors asking: What should I do to protect myself?
The standard advice is to avoid doing anything rash, such as suddenly pulling your money out of stocks to guard against a worst-case scenario. For long-term investors, reacting to headlines is rarely the right move.
Still, the possibility of a big sell-off in the stock market cannot be discounted.
THE EXTREME IMPACTS
The election in Greece Sunday could determine whether the country remains in a union of 17 countries that use the euro. If Greek voters hand victory to the anti-reform Syriza party, world markets are expected to tumble.
"We could see the S&P drop another 15 percent over a period of weeks," says Paul Christopher, chief international strategist for Wells Fargo Advisors. "That's just from Greece."
A decline of another 30 percent could be in store, he says, if Spain and Italy ultimately follow Greece out of the eurozone.
For that dire scenario, "you'd have to have a lot happen," he acknowledges. And other experts have a more optimistic outlook. Still, Christopher puts the odds of it happening at one in five _ scarily high for investors keeping a wary eye on their fluctuating 401(k) balances.
On the upside, a "relief rally" could lift stocks if elections keep Greece firmly within the eurozone and Italy and Spain also hold steady. Some of the concern about Europe already has pulled down U.S. stock prices. The Standard & Poor's 500 index shed nearly 10 percent in April and May and remains down 5.4 percent from its April 2 peak.
Even if that doesn't produce a big immediate gain, those who retreat into cash and don't come back for a while risk hurting their portfolios. After the market hit bottom in March 2009, the S&P 500 rose 50 percent in about six months. Many investors weren't in the market during that run, never quite confident enough to jump back in.
"This is not something where you change your investing strategy," says Pat Dorsey, president of Sanibel Captiva Investment Advisers in Chicago. "People are looking for the next Lehman, but the odds of a global credit crunch like we had in late `08 coming out of this are much, much lower than the markets have priced in."
EVENTS TO WATCH
Here are upcoming dates for investors to keep in mind for after the Greek election, to gauge whether progress is being made and watch for incremental news that could cause market swings:
_ Monday and Tuesday: Leaders of the world's 19 largest economies plus the European Union meet in Los Cabos, Mexico.
_Tuesday and Wednesday: The Federal Reserve meets with speculation swirling that it could extend "Operation Twist" to spur growth, which is scheduled to expire at the end of the month. That's the Fed program to sell $400 billion of the Treasury securities that it owns that mature in less than three years, and replace them with longer-term securities that mature in six to 30 years.
_ Thursday: Finance ministers of the 17 euro countries meet and are certain to discuss a pledge of $125 billion to rescue Spain's banks.
_ Friday: Leaders of the four biggest economies among the euro countries _ Germany, France, Italy and Spain _ meet in Rome.
_ June 28: Leaders of the European Union gather in Brussels with financial markets poised to jump if they agree to new measures to fight the crisis.
ADVICE FOR INVESTORS
Investors should try to keep fear and hunches out of any decisions involving their stocks.
_ Those in their 20s and 30s should ride this one out without tinkering with stock allocations. With decades to go before they need the money, odds are in their favor.
_ Those who intend to tap stock accounts in the next year or two, perhaps for their children's college tuition or retirement, may want to exercise more caution by reducing the percentage of stock funds in their 401(k) accounts.
Abandoning stocks because of this crisis would be a mistake, however. Sticking with the market generally is rewarded in the end.
One relatively safe bet in the market is companies that make products and provide services that people buy no matter how bad the economy gets.
Think food companies, drug store chains, tobacco companies and makers of things like laundry detergent and toothpaste. These companies are up a respectable 2.6 percent over the last three months. The S&P 500 is down 4.3 percent.
Or you could stick to companies that pay high dividends _ in many cases, more than double the 1.6 percent that 10-year Treasury notes are paying. Look for the dividend yield _ how much a company pays per share per year divided by the stock price.
Telecommunications stocks, such as cellphone providers, have an average dividend yield of 4.8 percent, best among the stock groups in the S&P 500. Utilities have an average dividend yield of 4.2 percent. For the whole S&P 500, it's 2.4 percent.
That's one reason the Dow Jones utility average is up a strong 4.8 percent since the start of April.
AP Business Writer Christina Rexrode in New York contributed to this report.