The Domino Effect??

http://www.collaborativefinancialsolutions.com/files/LPL/Research/RES%202354%200610.pdf


Many investors and market pundits prescribe to the Domino Theory, which states that one bad event tips over another issue that eventually causes everything to fall just like dominos.

The thought is that the already fallen dominos, such as unemployment, home losses, Greece, and others, have created a wave that will spread through the global economy.
While the Domino Theory certainly makes sense in the realm of little black stones with white dots on them positioned in an orderly pattern, it is based on assumptions that frankly do not hold water in the complex world of global markets.
While there has been much focus on the negative effects of the crisis in Greece and other European nations, the markets have not factored in that positive events have also sprouted as a result of these issues.

Consumers have lower mortgage rates, lower gas prices, and employment has posted job growth to the tune of 1.1 million net new jobs (not including census workers) in six of the last seven months.

Global central banks in economic powerhouse countries like the U.S., China, and Brazil once again have a reprieve from inflation concerns.

Valuations are now set at attractive levels, and fundamentals of the market continue to trend towards the transition to sustainable growth.

But do not expect a straight up rally from here — volatility will likely remain very elevated.