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Pimco’s El-Erian Dissects the News out of the EU for Us Simple Investors

June 29, 2012 | About:

If you are like me, trying to figure out what is going on and what is going to happen in Europe is a fruitless effort. So I listen to the likes of Pimco’s El-Erian who has the time and the brainpower to think the issues through.

Then after listening, I go back to trying to find companies that are trading at half or less of what a profit motivated acquirer might be willing to pay a couple of years from now… and trying to tune out the emotions that drive the market behavior.

El-Erian comments on the recent news out of the EU that has the market rallying:

- He thinks that there is good reason that the markets are excited, but doesn’t think that this is a breakthrough to really get through the mess.

- He is worried that investors will use this rally as an exit, and the markets will quickly reverse course.

- He just spent nine days in Europe and people are very nervous and the economies are slowing very rapidly.

- El-Erian thinks that the flight to safety will continue and that Treasury rates are going to stay very low.

- Pimco is staying invested in quality and avoiding risk.

- Germany’s Merkel has a tough task because the average German does not yet feel the pain of all this, so for her to take the steps necessary would cost her a chance at reelection.

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