Other than Obama's new(?) tax plan to tax "millionaires and billionaires," there wasn't much news to point to for an explanation of the nearly 8 percent drop in world equity markets from Tuesday at 2 PM until Thursday afternoon's market close.
Greece is old news and so is the weakness in the American economy. Nothing new on this front was announced prior to the selloff.
The equity markets seem to be stuck in a very wide trading range since early August. If so, the market probably rallies from here. My own guess continues to be that this is buying time for long term investors. This is not a time to be exiting equity markets, but a time to be planting a large foot into these markets.
It is scary. Government policies in western countries have been so absurd for so long that one despairs that things can ever be turned around. But, they can be and, I think, will be. Most Eurozone countries are going to default on their debt and a number of high-profile European banks have no hope of survival. Once these things happen, then we have a real chance for an economic revival.
As long as western politicians think there is some magic and painless solution to the debt crisis that avoids defaults, then economic stagnation will continue. But, the clock is ticking. Defaults will come whether politicians like it or not. The sooner the better.
So, it still makes sense to own equities -- perhaps more now than ever. Markets can see into the future and past unpleasant events. We will get there and get past all of this.