Recent events have created anxiety in the world markets. There is fear again that a crisis is brewing worldwide that will negatively impact the equity markets. Concern is now focused on sovereign debt. Greece’s lowered credit rating, together with the unfavourable outlook for the debt of other European countries and the financial problems of Dubai has expanded market apprehension and led to equity market declines globally.
However, increased market fears create improved opportunities for equity investors to find value. As Warren Buffett said:
“When markets are greedy, be fearful, and when markets are fearful, be greedy.”
We at Tralucent believe that the fiscal crisis facing Greece has been blown out of proportion. Greece is part of the European Union and it will be provided with the funds necessary to manage this crisis. The small size of its economy as a proportion of the European Union economy means that even if the worst case scenario is played out, in the long run the global impact will not be significant. We are using this market decline as an opportunity to add quality stocks at reasonable prices to our portfolio and we recommend that our investors do the same, within the confines of their asset mix.