The recent economic turmoil has been a popular topic of discussion the past month.  I’m personally impressed at the incredibly high level of volatility of the world stock markets.  As investors react to new information, the U.S. market has taken some wild swings.  Down 7, up 5, down 6, down 8, up 11 (as measured by the S&P 500 Index).  This is the type of volatility usually reserved for emerging markets.

What explains this volatility?  Is it simply that investors are more uncertain than is customary as to the direction of the world’s economies?  Or does this reflect growing distrust (and counter support) of the fundamentals of western-style capitalism?

If you “know” the answers, this volatility provides an excellent opportunity. 

Dan Caruso has several posts on this topic of Contrarian Investing in bearonbusiness (Investor Riddle and Contrarian Investing).  It would be worthwhile to read them as you ponder your next move. 

Of note, when many of us were selling, Warren Buffett was buying, both through Berkshire Hathaway and his own personal holdings.  As Mr. Buffett writes in his op-ed to the New York Times:

“A simple rule dictates my buying:  Be fearful when others are greedy, and be greedy when others are fearful.”