As I watch the events in Europe unfold, it’s like observing a slow-moving train wreck.
Everyone knows the 800lb. gorilla in the room is Germany, and that Greece, Italy, and the rest of the PIIGS must tighten their belts to receive any kind of financial aid whatsoever.
Transcribing proposals on paper and discussing them in parliament is one thing, implementing those ideas in the real world is something completely different.
All the theatrics of meeting after meeting, general pronouncements, and dramatic conference calls can do no more to stop the inevitable than a lifeguard raising their hand trying to stop a tsunami. Or the Pope's bull against Haley's comet.
Because it provides investors with an overwhelming false sense of security to be able to quickly react and save themselves, I am extremely concerned about the sluggish nature of the proceedings in Europe.
It has often been said that bull markets go up by using the stairway, while bear markets take the elevator. Given the monumental impact a European collapse will have on the whole world, you would think most investors would be making accommodations for the impending doom.
Sadly, most people are reactive, not proactive.
Nearly everyone remembers the dot-com bubble crash of 2000 which materialized over a couple of years, or the even the credit crisis of 2007 that played out over months.
I would point to the two weeks preceding August 9th of this year when the stock market erased all the gains of 2010 and 2011.
From years, to months, to weeks, to ________. Do we fill in the blank with days or hours?
Regardless, the European credit crisis is the straw that will finally break the market’s back.
Waiting for that to happen is as foolish as saying the proverbial “this time it’s different,” or “don’t worry, it will come back.”
Investors believe they can respond quickly enough. Unfortunately, it never happens that way.
People who survived a near death experience sometimes report seeing their “life flashing before their eyes” during the accident.
During a car (or train) crash, the person may report time slowing down, and their entire life replayed in flash images in their mind.
Today, the warning signs of the impending crash are painfully obvious. Please don’t be mesmerized by the slow motion of the inevitable wreck.
No matter the speed, there’s usually only one ending.
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