The market "prices in" various risks. For example, as the market worried increasingly about the European crisis, it continued to discount the value of stocks lower and lower. It would stay low until worry about that risk subsided. Yesterday, there was a surprise CNBC report, that seemed to come out of left field, saying there was a serious effort to put together a European version of our TARP. The Dow promptly jumped 273 points. Today, the futures indicate it will open another 180 points higher. Europe is up 3-4%. It looks like a very good day indeed.
Here is what is worrying me: there are almost no details! Given the inability of the 17-nations in the European Union to even agree on the definition of the problem, this "deal" could easily unravel. The next vote is Thursday in Germany. If they vote against it (whatever "it" is), you can expect an ugly drop in the market immediately afterwards. The fat lady has not sung yet!
I do believe that our market will rally even more when we know the European debt crisis is resolved, because the chances of another full-blown recession in this country will drop dramatically. This affects everything from unemployment, governmental revenues, and, oh yeah, the value of your portfolio.
Here is what is worrying me: there are almost no details! Given the inability of the 17-nations in the European Union to even agree on the definition of the problem, this "deal" could easily unravel. The next vote is Thursday in Germany. If they vote against it (whatever "it" is), you can expect an ugly drop in the market immediately afterwards. The fat lady has not sung yet!
I do believe that our market will rally even more when we know the European debt crisis is resolved, because the chances of another full-blown recession in this country will drop dramatically. This affects everything from unemployment, governmental revenues, and, oh yeah, the value of your portfolio.
