Note to Seeking Alpha, please don't bother publishing this article.
This article doesn't offer any indepth analysis or advice.
Normally, I can investigate a company's financials and business outlook
to arrive at an investment thesis. I might wish to go long, short, or
just ignore the company and its stock altogether.
But right now, with the heightened uncertainty in Europe, analysis is
useless. Correlations among most equity securities are close to one, and
the headline risk dominates any security analysis. If the headlines are
positive, then it is risk on, or, if the headlines are poor or
uncertain, it's risk off.
I suspect that most fiduciaries have moved to the sidelines as much as
possible. While they might miss a rally, their primary concern is not to
be caught in a meltdown. Later, if necessary, they will chase the market
upward. If Europe is able to stabilize for a while, then we might be in a
position for a major advance. There are a lot of ifs and
maybes.
While I have reduced my exposure to the markets from my summer levels, I
still have reasonable exposure. Depending upon how Europe plays out, this
might be a wise or not-so-wise strategy.
Of the articles I read this weekend, here are two articles with opposite
directions. First, a negative or cautious Telegraph article:
Prepare for riots in euro collapse, Foreign Office warns. Preparing
for riots doesn't sound encouraging, does it? Next, a positive or hopeful
Bloomberg article
IMF Readying Loan of as Much as $794 Billion for Italy, La Stampa
Reports. If the IMF or some other party rides to the rescue, then
that will certainly influence Monday's markets.
Unfortunately, I do not have much to offer in terms of advice or
recommendations. For now, I suggest paying attention to the headlines and
making sure that your portfolio can withstand these challenging times.
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