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Life in Europe
I've been on the road for the past 11 days. First to Italy with my wife and another couple, then on to Rome, Sorrento, Positano, Pompeii...some great adult time. (We left our three small children at home with the grand parents). And then it was off to the Czech Republic to speak at the Prague Money Show and discuss current market conditions around the world. When I travel, I love to explore off the beaten path. No guidebooks. No maps. Just walk out the door, take a left and see what happens.
And, most importantly, I always talk to the locals...
Although I read a lot of various periodicals and financial newsletters, there is no better way to get information than from the source itself. Have you been reading about the problems in Europe from writers who have never even been to Europe? It's a lot different than going to Europe yourself and talking to real people with normal jobs about their own hopes, dreams, fears and desires.
Bottom line? The one thing that stood out when I spoke to people, especially in Italy, is that Europeans have been down this road before. A few of the locals referred to the U.S. as a "young puppy;" meaning that the U.S. hasn't lived through thousands of years of regime changes, ground invasions, currencies being reduced to worthless pieces of paper, power struggles that have caused entire countries to disappear...
The list goes on and on. Italians have been down this road before, and in fact much of their history has been a continuing experience of even worse conditions. In the end, they told me that "life will go on" and the important thing is to enjoy life while they are alive. It's a great attitude.
This is evident in their traffic conditions. The roads are crowded. There are no clear lanes where cars are supposed to travel. And pedestrians often cross the street without looking. And amidst this chaos, nobody honks, nobody slams on their brakes and curses, and no one gets hurt. Life just flows. No matter how bad things get, they realize life will go on and the important thing is to adapt, go with the flow, and enjoy the time on earth while they have it. They realize the only certainty is change. Or, as one gentleman so eloquently put it, "The people in power will grab all they can until they screw things up, and then another group will come into power and grab all they can until they screw things up. That's just human nature and it's been like that since the beginning."
In other words, no matter what happens, Italians will be fine. Rome used to rule the world, but today it's still a great city to visit and in which to live. There are lessons to learn here. The number one being, "Don't stress about how things should be, focus on how things really are." The Italians may not change the world anytime soon, but they will at least enjoy the ride.
The Czech Republic is another story. This country, though it has close ties to the European Union, is still on their own currency. Political corruption is rampant. And the main goal of many lower level employees is to see how much they can steal. It's expected, actually. This is a country that is very skeptical (to put it lightly) of people in power, and the only thing to really do is grab all you can, while you can. In fact, when I told them that, in my home state of Texas, there is no state income tax -- they were actually perplexed as to why everyone in the U.S.had not moved there.
As I make my way back to the U.S., I keep having both of these philosophies bounce around in my head. And I think there is wisdom in combining both of these outlooks on life. First, don't get stressed out about things that are out of your control -- enjoy what you have and be grateful for your time on earth. Second, a fool and his money is soon parted. There is a happy balance in there somewhere.
For myself, I'm looking at the markets and I'm seeing the winds of change. Money is shifting in and out of assets at a fast clip. One day oil is hot, the next day it's cold. One day the euro is weak, the next it's strong. The list goes on and on. We aren't in the middle of any lasting trends right now -- we are in the middle of a shake up.
One of the best things to do in this type of environment? Simple: sell premium. Anxiety in the markets increases the premium paid for options. Increases in premium bring fantastic opportunities to sell one and two strike, out of the money, credit spreads. This is a great source of income, and the great thing is, you don't have to be right to make money. (That is, if the market goes sideways, you still collect your premium).
Right now, my favorite premium selling candidate is the stock MA (Mastercard). The premiums are high, the trend is high, and selling premium in the form of out of the money put credit spreads has been and should continue to be a steady source of income.
And this is a great way to enjoy this time on earth, while grabbing what you can.
John Frederick Carter