The market plunge is not real - a good time to buy

Greece is plunging the markets for more that 4-5 days that only shows the irrationality of the markets. It is not possible such a small country and such a small problem to have such a great impact on markets. Up to now the losses exceed the entire value of Greece, along with all its production for the next 1000 years. I think the markets are being pressed down by much more significant factors than Greece alone. I think the purpose is to use the Greece crisis to devaluate the assets and buy them cheaply. In 1-2 months they will be sold back with a big profit.

Euro will not disappear without Greece. It is possible even the opposite to happen. When the mechanism of excluding from the Euro-zone the problematic countries is tested and is successful, this may even strengthen the Euro.

The problems of the Euro are not real problems of the currency. They are problems of indebted governments that are transferring them to the currency. The governments are trying to solve the problems by devaluating the currency. So if the Euro zone is freed from the problematic countries there will be less destabilizing factors.

There is an argument more in favor of Euro. When Greece is out, the rest of indebted governments will see the result of Euro-exit and will be more motivated to make reforms. Greece is to lose a serious part of its living standard and much more pain is to come compared with reforms-pain. So seeing the alternative other countries may be scared and become more wise. And as the lack of reforms is the main reason for problems, so a bad instance in a small and controllable region may be very useful...
So my advice in these bearish times is simple: "Buy..."

May 14th 2012

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