MENA - Middle East and North Africa - such a mysterious place and yet the newspaper headlines were full of news about it every day for the past few weeks. First, we have crisis in Tunisia, then Egypt and now Libya. What's next? And, so and so on.
Sometimes, it is great to get excited over something. But, we would like to avoid over-reacting to every single crisis that comes our way. Personally, I think the greatest or the worst crisis in this decade should be the financial crisis in 2008/2009. It nearly dragged every largest bank and every greatest economy down. It could have crashed the world financial system and brought our financial system back by a few hundred years. If you compare this to what we are seeing in Middle East today, I think what we have today is really no big deal.
Libya produces only 2% of the world oil supply. Even, if it stops producing oil today, the spare capacity from the other oil producing countries would have easily cover that many times. Their worries are more on whether the oil price would crash if there is over supply because of this. Of course, there is bigger worry on whether the geopolitical crisis will spread to other countries like Saudi Arabia, etc. Sigh. When we get really pessimistic about something, we will start digging our graves as if it is the end of the world. Even if the crisis spreads to the other ME countries, so what. These countries will still need to sell oil to live, don't they? Finally, the world will still go on, no matter what.
As for the stock market, it is going through the same old problem again. Everybody is fearful now and this is like what we were two years ago. I think volatility will still exist for a while. But, we should be mindful of the wise saying "When everybody is fearful, be greedy. And, when everybody is greedy, be fearful."
Happy investing.
