Not so long ago, May Day in fact, the tea leaves flashed a ‘mayday’ and stocks responded almost immediately by going down like one of the miserable adversaries of Manfred von Richthofen, the World War I flying ace also known as the “Red Baron.” To extend the metaphor let’s say Europe is the Red Baron whose reputation currently has his enemies, the financial markets, shaking in their flight suits. What these preoccupied pilots may not yet see, however, is that there is hope on the horizon.

Jim Rogers has said, “just about every time you go against panic, you will be right if you can stick it out,” and panic has returned to the stock market as measured by a variety of indicators. As hard as it is to believe after a correction that is currently only flirting with the 10% threshold, the Citigroup Panic/Euphoria Model, Individual Investor Sentiment and Surveys of Wall Street Strategists demonstrate that investors are about as scared as they were during the depths of the financial crisis. This now familiar and pervasive despondency toward the equity markets has inspired the Financial Times, in very Business-Week-like fashion, to call it the ‘death of equities‘ in today’s edition.

While I haven’t heard Jim Rogers say he is currently taking advantage of this situation in the stock market, two other all-star investors have publicly declared their fervor for the opportunity at hand. Warren Buffett and Carlos Slim, two men whose combined worth is greater than the economic output of most countries, are currently in the markets buying stocks as they go “on sale.” Corporate insiders have also recently stepped into the fray in a validation of the faith contrarian investors like these two are placing in them.

It may pay to remember that, while the Red Baron justly earned his reputation, during his heyday many of his feats were exaggerated far beyond what he accomplished in reality. He was shot down and the war eventually ended. Likewise, the situation in Europe presents great risk to the global economy but it won’t put the likes of Coca-Cola, General Motors or America Movil out of business nor will it go on forever without some sort of resolution. In fact, the smart money is betting on it.

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