The markets are exploding higher this morning, up over 3.5% on news that the European Central Bank, the Bank of Japan, the U.S. Federal Reserve, the Canadian Bank and the Bank of England are all working together to lower worldwide currency swap interest rates...this basically means all of these banking powerhouses are working together to try to address and manage the financial crisis in Europe. This is EXACTLY the kind of news we've been waiting to hear. As you can imagine, the leading sector in the market this morning is the financials. I bought some stock yesterday, but I'm not selling any of my holdings as of yet (this may change later after I talk to some other money managers).
If, however, anyone out there has had trouble sleeping over the past month because of the wild action seen in the markets, today would be a good day to sell some stock and lighten up a bit. As I've said over and over, if we can get some stability in Europe, and if this progress that we've learned about this morning can actually follow through, then I would expect the markets to move strongly to the upside over the coming month. Now would be a good time for mutual fund investors to look at what bond/conservative funds they might currently be in and what stock funds they might/can move (reallocate) their money in to.
To be clear, I am by no means signaling the "all clear" to buy stocks hand over fist, because as we've seen before these positive news headlines out of Europe end up fading away after a couple of days...but if we truly start to see the crisis being averted (I'm not talking about a European recession b/c I think that's inevitable), then I would stick to my thesis and buy stocks.
