"... most people say, 'We're not going to try to catch a falling knife; it's too dangerous.' They usually add, 'We're going to wait until the dust settles and the uncertainty is resolved'.
The one thing I'm sure of is that by the time the knife has stopped falling, the dust has settled and the uncertainty has been resolved, there'll be no great bargains left. When buying something has become comfortable again, its price will no longer be so low that it's a great bargain. Thus, a hugely profitable investment that doesn't begin with discomfort is usually an oxymoron."
- Howard Marks (h/t Distressed Debt Investing)
The quote above reminds me of what I have been hearing lately. Everybody is sitting with low equity exposure waiting for the dust to settle in Europe, after which they will pick up great bargains. That is not how markets generally work. It is more likely they will end up chasing markets at higher prices.
I don't want to belittle the problems facing Europe or the rest of the World as they are very serious. While I am talking very bravely, my positioning is not nearly as aggressive as I would like it to be because there is the potential for a disaster. However, more often than not buying at times like the present, when everybody is risk averse, works out well. Even if the disaster scenario plays out, who says we cannot have a rally first. If a non lethal solution to Europe is found we will see a performance chase circa OJ on the Santa Monica freeway.