Were you brave enough to buy equities in the euro crisis?

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The markets of Europe and the U.S. have been rallying hard since the euro summit.It was agreed that most of EU countries would tie themselves tighter together for the sake of their common currency. Pundits don’t seem to think the problem is sorted, but the market seems to think it has.

Anyone brave enough to have bought equities in the pit of euro crisis anxiety is looking pretty clever.

‘Watch the market not the news’ has been the model that has worked for me the best in the last six months.

This means paying attention to the market price swings ahead of the news we get. Waiting to hear what is going to happen in the euro crisis and then decide how to trade is pointless–the market has already learned about this ahead of time and has moved accordingly.

In effect, there is an enormous amount of insider trading going on in the current climate. This is awful, but hardly surprising, when you consider just how many people are involved in the process of unscrambling the world economy.

The theory says that this can happen magically without leaky politicians, bureaucrats or bankers letting the facts slip out before anyone in the mainstream gets it. However, it’s a huge stretch to believe this, when it is so much more likely that a small percentage of the people involved are blabbing to “friends and family.”

This is yet another reason why it is dangerous to speculate rather than invest.

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