DON"T LET THE DOWNTURN

Don't let the downturn go to waste.

Now that could be some important investment advice for many.

If it sounds like buy on the dips, in part it is. But on a larger scale it's advice bureaucrats and politicians almost always fail to heed.

When recessions come along, sometimes more often than one would think--just ask Italy, smart people close locations, let others go out of business and cut costs and fat. We said smart people.
We imply, you infer.

Even the most hasty look at the European situation today, notwithstanding the yet to be felt recent Russian counter sanctions, politicians there did next to nothing to benefit from the previous downturn a couple of years ago.

All the world hates austerity. In short, they let it go to waste. And now it might be returning even bigger than ever. The German Dax recently all the rage is now hovering near a 10% decline; we already mentioned Italy; the yield on the 10-year German bund fell to a record low of 1.05%; and the French bond suffered a similar fate.

Lest anyone need be reminded that's not a big 1-2 punch to the economic midsection; it's a big 1-2-3 hit to the EU's three largest economies. Take out some event-driven deals here in the US like M&A and tax inversions and what one is left with is the gloom and doom that the stock market in all of its wisdom these days seems to feed on and apparently loves.

And just for kickers the Japanese market sold off 3% Friday, even though some are saying look to Japan, the UK and, yes, Russia for any overseas value. The Chinese market apparently owing to some upcoming market reforms and some improving economic fundamentals is up around 20% from earlier lows this year.

The other side of that coin is value investors like Buffett and many others report holding huge amounts of cash. In reality, however, it's pretty difficult to find reasonable returns without taking on great risk. Some would say such things are the nature of conundrums.

Rather than chasing anything here, we think a better approach is: Don't let the downturn go to waste.
t. man hatter