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.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV