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Katz: Lessons of the European Fiscal Crisis

What we are seeing in Europe are increasingly flexible, results-oriented solutions, as problems that carry increasingly severe implications can no longer be kicked down the road. While a number of situations have brought Europe to the brink of disaster, in each case, sound minds have prevailed. Unfortunately, the fear of the impending disaster has caused the powers that be to engage in uncomfortable, but essential, fixes.

Why is this such an important lesson for investors and investing? Because it allows us to put overarching macro issues into context. It enables us to say that, yes, there are serious problems, but the consequences of failure are so dire that fixes are eventually put in place.

With that as backdrop, investors can retain a focus and perspective that has more than a 48-hour lifespan. For value investors, that means keeping an eye on fundamentals rather than solely worrying about things that are only tangentially related to the attractiveness of a company's stock.

It may turn out that last week's announcements will enable the market to return to the more normative focus of the first quarter. While such a change is welcome, we know that even without it, maintaining a fundamental focus will ultimately make the most sense as the way to both navigate in the near term and to invest in the intermediate and longer term.

When investors have the opportunity to buy high-quality growth businesses at high single-digit/low double-digit price-to-earnings multiples, there is a greater likelihood that the stocks will be meaningfully higher 12 and 18 months down the road.

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