A Wall of Worry
We wrote about the renewal of the Greek debt crisis a month ago, noting that it was “like deja vu all over again,” mirroring the Greek debt crisis we were writing about back in October of 2011 (Beware of Greeks Bearing Gilts), when the markets were also in turmoil. The apparent resolution of Greece’s standoff with the Troika of European Commission, European Central Bank, and International Monetary Fund has allowed the world to turn its attention to China, where fear of a slowing economy caused that country’s main stock market to plunge 8.5% in a single day. What are we to make of all this?
To begin with, such news is always to be had. If we start with the Greek debt crisis of 2011 and retrace our steps to the present day, we’re reminded that we lived through a long list of troubles, including the following:
- Fears of a Greek debt crisis and the resultant market volatility
- Fears that the Eurozone was slipping back into recession and the resultant market volatility
- Fears that Japan was slipping into deflation and the resultant market volatility
- Fears of a budget impasse in the US, the “fiscal cliff,” and the resultant market volatility
- US government debt downgraded and the resultant market volatility
- US government shutdown and the resultant market volatility
- Russia’s invasion of Ukraine and the resultant market volatility
- The startling rise of the Islamic State and the resultant market volatility
- Widespread fear of an Ebola pandemic and the resultant market volatility
- Bringing us back to . . .
- Fears of a Greek debt crisis and the resultant market volatility, and . . .
- Fears of slower growth in China and resultant market volatility
But here’s the thing we forgot to mention when we wrote a month a ago: since the first Greek debt crisis back in 2011 and through all the scary events since, only some of which we enumerated above,
Client portfolios are nearly 40% larger than when Greece was first rattling world markets, with average annual rates of return running about 9%.
There’s an old Wall Street saying that captures the disconnect between the inevitable daily drumbeat of bad news and the long-term propensity of markets to rise:
The market climbs a wall of worry.
So, as is almost always the case — and as we’ve said before — it’s best to Ignore the Headlines.
Here’s wishing you a peaceful and pleasant weekend.