Fear, Frustration, and the Eurozone Crisis

Yesterday, I gave a very brief overview of what's going on in the eurozone, and Greece in particular. Today we'll examine how Fools have reacted, and how you can actually benefit from the mess in Europe!

Over the past week, The Motley Fool put out a snap poll asking members what they thought, and how they were reacting to the situation across the pond. Though highly unscientific, the survey revealed some interesting finds; namely, that fear and frustration are dominating.

Fear dominates
Not surprisingly, only 20% of you are investing more today than before the eurozone crisis started back in 2009 (of course, there's another variable at play here: the Great Recession). And though share prices for companies that do business in Europe have been depressed lately, only 40% have been able to take advantage of the situation.

This highlights why Warren Buffett's dictum to "be greedy when others are fearful" is so difficult to follow.

Sure, you'd be sitting pretty if you had been prescient enough to pick up shares of Aflac (NYSE: AFL  ) when they dipped down to $10.83 in 2009 on fears that they were overexposed to European hybrid securities.

But you could just as easily have tried to make a profit by jumping on shares everyone was running from -- like the National Bank of Greece (NYSE: NBG  ) or Aegean Marine Petroleum (NYSE: ANW  ) -- only to see the shares keep tanking, by 85% and 69%, respectively.

Frustration: Why can't they get their act together over there?!?!
Fifty percent of our respondents are stressed out by the volatility that the eurozone crisis is creating; more than 75% are tired of Europe's inability to handle its finances; and a full 90% think plain, old self-interest is preventing a real solution from being reached.

It's not surprising to see entities acting in their own self-interest. After all, that is the basis for capitalism. The real trouble seems to be from the entanglements that the creation of the eurozone has spawned.

What were once 17 independent countries using their own currencies in the late 1990s have become a behemoth of more than 300 million people of different languages, customs, and -- it appears -- approaches to fiscal responsibility, all lumped together as one. Because Greece admittedly fudged its numbers to gain acceptance to the eurozone, its people are now being told what they can and can't do by forces outside of their country, creating an untenable situation for all parties involved.

What's an investor to do?
In a recent installment of the Fool's MarketFoolery podcast, our crack team of analysts pointed out that by simply investing in companies with little exposure to Europe, we can mitigate some of the continent's pitfalls.

Taking a cue from their suggestion, you could easily put your money in Apple (Nasdaq: AAPL  ) , which, though it does have sales in Europe, is doing far better in Asia. Or you could go after Berkshire Hathaway (NYSE: BRK-B  ) , a conglomerate of businesses handpicked by Warren Buffett and guarded by an unmatched balance sheet. Or you could simply go for North American cigarette maker Altria (NYSE: MO  ) , which throws off a hefty 6% dividend yield. Be sure you pick Altria, and not its international spinoff, Philip Morris International (NYSE: PM  ) , if you're trying to avoid Europe at all costs.

Finally, if you want the stabilizing and income-producing benefits that come along with owning dividend stocks, I highly suggest you take a gander at The Motley Fool's newest special free report: Secure Your Future With 11 Rock-Solid Dividend Stocks. The report details 11 companies whose dividends will help pad your retirement account for years to come. The report is yours today, absolutely free!

Fool contributor Brian Stoffel owns shares of Berkshire Hathaway, Aflac, and Apple. You can follow him on Twitter at @TMFStoffel. The Motley Fool owns shares of Aflac, Philip Morris International, Berkshire Hathaway, Apple, and Altria Group. Motley Fool newsletter services have recommended buying shares of Apple, Berkshire Hathaway, Philip Morris International, and Aflac, and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (7) | Recommend This Article (25)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 02, 2011, at 5:47 PM, xetn wrote:

    Here is another take on the EU problems, with some great analysis:

    http://mises.org/daily/5798/Will-the-Latest-Plan-Fix-the-Eur...

  • Report this Comment On November 02, 2011, at 6:52 PM, fhtours wrote:

    As I am primarily a dividend investor the votality hasn't bothered me that much except with the two Euro stocks I own that have both suffered from this situation. On the other hand I have used the big swings in the market to make money by buying a stock that follows the DJI closely (PCP)and then hedging that by buying An ETF that shorts the market (VXX). Buy VXX when the market is up and sell when it is down. Buy PCP when the market is down and sell when it is up. I have made this turn at least four times in the past couple of months and made money every time. For me picking a buy and sell price ahead of time and sticking to it has taken a lot of the stress and time involved out of the game and made it an easy way to sit back and wait for the next big move in the market.

  • Report this Comment On November 03, 2011, at 12:26 AM, Merton123 wrote:

    If a person has cash - Europe and Japan is the place to be. You have good companies trading for low prices. If you don't have cash because of the great recession then you have other priorities like paying down credit card debt; job retraining; and so-forth.

  • Report this Comment On November 03, 2011, at 10:12 AM, TopAustrianFool wrote:

    9 out of 10 think self interest is keeping Europe from arriving at a workable solution?

    There is no workable solution! It is obvious that 9 out of 10 Fools have not taken the time to look at the numbers which show Euro growth have to be over 8%/yr over 5yrs in order for the Euro to survive. And that is a conservative estimate.

    Why are so many people content with the media propaganda lie that if they acted in unison they would be able to solve the crisis? There is not enough Euro cash to pay for the squandered wealth. Period.

  • Report this Comment On November 03, 2011, at 10:15 AM, TopAustrianFool wrote:

    "Here is another take on the EU problems, with some great analysis:"

    http://mises.org/daily/5798/Will-the-Latest-Plan-Fix-the-Eur...

    9 out of 10 Fools should read this. Then 9 out of 10 Fools who think self interest is keeping Europe from arriving at a workable solution, would realiz that acting in unison to bail out Greece would only make the crisis worse.

  • Report this Comment On November 03, 2011, at 11:18 AM, DJDynamicNC wrote:

    @TopAustrianFool - that article was a little atrocious. Allow me to quote at length:

    "Is it true that if every bank were to attempt to "fix" its balance sheet, the collective outcome would be disastrous for the real economy? On the contrary, by adjusting their balance sheets to reflect true conditions, banks would lay the foundation for a sustained economic recovery. After all, by trimming their lending, banks are likely also to curtail the expansion of credit "out of thin air." It is this type of credit that weakens wealth generators and hence leads to economic impoverishment.

    Contrary to the proponents of the "paradox of deleveraging," we can only conclude that if every bank were to aim at fixing its balance sheet, and in the process curtail the expansion of credit out of thin air, this would lay the foundation for a healthy economic recovery.

    We suggest that the crunch in the eurozone will occur not as a result of deleveraging as such but because of the damage inflicted on the process of capital formation by past and present loose monetary and fiscal policies.

    The deleveraging is just a symptom of the diminished ability of the economy to generate capital. Hence any attempt to fix the symptom is only going to make things much worse. (Note again in this sense deleveraging is good news for the capital-formation process because it reduces the inflationary credit and hence money out of thin air.)"

    What we have there is the same unsupported assertion made three times in three different phrasings. Repitition is no substitute for evidence.

    The paper goes on to detail how the recession effects are suppressing bubble activity, and how that is a good thing. While I concur that a recession will suppress bubble-form economic activity, I would suggest that this is a result of the ongoing suppression of ALL economic activity from our aggregate-demand recession. Surely there are more effective - or, at least, more equitable and nearly as effective - methods of bubble suppression.

    Glass-Steagall comes to mind.

  • Report this Comment On November 03, 2011, at 12:11 PM, TopAustrianFool wrote:

    Just by your comment on " from our aggregate-demand recession," I can tell you subscribe to the flawed Keynesian non-sense that the govt and the Fed have practized for the last 5 yrs and have not worked, and arguably have made the depression worse.

    What is the "result of the ongoing suppression of ALL economic activity," that you are refering?

    The only way to improve the economic status is to allow for real savings to catch up to time preference, not by simply increase cash in the bank balance sheets which can be done by pumping created fiat currency into the banks. That will only make it worse by providing new cash for new malinvestment and new bubbles.

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