It can mean only one thing: Fear is back. And surely for a reason. I feel the same way since beginning of May. The S&P500 is still a bit overvalued, in my view. Stocks are not that cheap, yet. But they might get cheaper, perhaps, again, in terms of S&P500.

Selectively, I believe, there are many great companies in Europe, selling for a good price, today. Not only banks. Oil companies are selling for their 10 years earnings (2000 – 2009) and some energy companies, like E.ON, are worthh considering, too. I accept, that their earnings were perhpas too good to be sustainable in real terms. But in inflated currency, who knows….

Simply because others are becoming nervous once more, Im preparing myself for greedy period number II.

I think people hold a lot of cash today, and they know it is risky. Therefore, I expect a lot of up and down, and finally UP. People hold cash because of greed, not as a safe haven!!! They know it is a bad/risky investment, but they believe that, later, they will be able to exchange cash for cheap equities or commodities. Once they understand that equities will not get cheaper any more in nominal terms, I expect huge rally, driven by inflationary fears. (Im not saying equities can not get cheaper, today. They surely can. Im just not good at market timing.)

In my view, the solution of all this is hyperinflation, not deflation. And governments will realize that sooner or later. Hyperinflation effectively means that all debts, payable in paper money, are forgiven. And that is what all indebted people need. It is not fair, it is not responsible, but I can imagine that it can work. Chapter 11 for everybody.

have a ncie day, G.