Market Crisis Or Opportunity?

May - 16 - 2010 Author: Christine Allen Respond

Here is a great excerpt from professional share investor Lance Spicer, it really does hit the nail on the head. I hope it provides some interesting insight to the recent market and media hype.

Start of excerpt:

It was around 18 months ago that the world’s media had you believing that the world was going into depression due to financial issues emanating from the United States. It didn’t happen.

They also said that the US economy wouldn’t recover for years, some even said “ever”. They were wrong the US economy is recovering with nearly all metrics showing steady improvement. They were wrong again.

The very same media people and “experts” were telling you that the days of the US dollar being the reserve currency of the world were over and the Euro should be the new reserve currency. I wonder what those “experts” are thinking now. Maybe they are a little quiet or have they lost their “expert status”?

So many investment “know it all’s” were telling you last year not to trust the rally that started in March 2009. If you had listened to them you’d be pretty cranky now. You see, they were wrong. Of course, I told my subscribers to “load up” in March and April 2009 and to ignore all the doom and gloom. My advice now is to again ignore the doom and gloom because it’s based on perception, rather than reality.

Now, we are faced with sovereign “debt crisis” in Europe and again the media and the “know it all experts” are out again scaring the life out of you, but as I say, most of it is perception. The markets are concerned with what “may” happen, not what is likely to happen.

As you well know, I was telling people that the GFC would pass and that the stock market “crash” was a fabulous opportunity to buy shares. It was. I told you that the US$ would survive and the US economy would recover and regain it’s position as the world’s #1 “economic engine”. Above all I told people not to panic or let emotion get the better of you.

Well here we go again, 18 months later we are in the midst of another crisis. I’d call it more a “crisis of confidence”. The confidence of investors has been shaken over the Greek debt situation and investors are worried that Spain, Portugal, Ireland and Italy could go the same way. They won’t. This is the market factoring in the worst case scenario due to being skittish after the GFC – and who could blame them. The Global Financial Crisis wasn’t much fun and the situation in Greece is merely an aftershock caused by incompetent fiscal management. Simple as that.

Will the economic recovery continue with all this going on? Of course it will. Sure, there will be a slight slowing of growth in Europe for maybe a year or two, but it certainly won’t derail the recovery going on in the US. The US recovery is very important to China and that means the US recovery is equally as important to us as we supply so much of the raw materials the Chinese need to make products for the world’s largest market – the United States.

However, we in Australia, have a few flies in the ointment in the form of the ill thought out Resources Super Profits Tax. I’m sure someone in government will give Messrs Rudd and Swann a tap on the shoulder and let them know that it may not be as good in reality as it seemed on paper, but that’s a whole other issue. I’ll be keeping a safe and prudent distance from stocks who will suffer most by Mr Rudd’s hand.

However, let’s not throw the baby out with the bath water. There are some outstanding opportunities out there right now, and not just in the US market.

End of exerpt.

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