Wednesday, July 4, 2012

What About Europe?

It's old news that Europe has been having serious economic problems. How has this affected my investment strategy? The short answer is that it has not affected it at all. My investment strategy is not dependent on economic events. What has already happened is already reflected in stock prices. Current fears about what might happen also is already reflected in stock prices. Since I can't invest in the past, bad things that have already happened and have pushed stock prices lower have no impact on my investment strategy. Since I can't forecast the future (no one can), I have no special insight into what bad things may or may not happen, so I don't invest based on widely known information that causes many to fear that bad things will happen in the future (also already reflected in lower stock prices). This doesn't mean that I haven't made any changes in my portfolio as a result of the economic turmoil in Europe, concerns about slowing growth in China, etc. So what have I done and why?