Is it time to pull out of the European Market?

Well it is clear that the psychology of the market is driving investor actions instead of the fundamentals. The U.S. economy continues to show increasing strength but the domestic market continues to fall on fears that Europe will fall into recession if they engage too aggressively in debt and budget reductions.

Of course the other side of the coin is if their austerity program is not aggressive enough, they will go all bankrupt and the whole house of cards will come tumbling down around their ears ending the great European Union and signaling the death knell of the Euro, the common currency of the member nations. The EU and the IMF are left with little room to maneuver as they negotiate the narrow chasm between bankruptcy and recession.

This is a heck of a balancing act and if they pull this off without fomenting a disaster, then the EU and the weak links comprised of the PIIGS will recover, but the recovery may take years. Thus the outlook for Europe is somewhere between bad and worse so this is not a good time to be investing in the European market. The reaction in the U.S. market, however, appears to be overwrought based on the current state of the economy and could be ripe for those investors who are willing to do their homework and screen for companies that are undervalued and buy them on the uptick.