Newspaper article Sarasota Herald Tribune

What Happens in Cyprus Stays in Cyprus, and That's Helpful

Newspaper article Sarasota Herald Tribune

What Happens in Cyprus Stays in Cyprus, and That's Helpful

Article excerpt

Nobody cares about Cyprus.

Those words, spoken to me this week by a former State Department official who was stationed there for two years in the 1990s, reflect not only a thousand years of history, but the reaction of modern- day investors as well.

Having lived in the Mediterranean nation as a child, I have an emotional connection to the island, and I watched the reaction to last week's divisive economic bailout proposal from the European Union with concern.

At the same time, the Cyprus crisis represents a turning point for U.S. investors. As the recovery here begins to take hold, American markets are no longer tethered to the obscure political twists of Europe.

Cyprus, in other words, isn't Greece, whose financial bailout roiled markets a few years ago. This time, the crisis is more contained and, despite the breathless cable TV live shots from the Cypriot capital of Nicosia, investors have become more discerning in how they react to European upheavals.

"We used to think of Europe as the slowest train wreck in history unfolding year by year in front of our eyes," said David Doll, managing director of Houston-based Sequent Asset Management. "But we have learned something."

While European economic growth continues to stagnate, the U.S. economy is showing signs of improvement, even if it's still getting persistent stimulus from the Federal Reserve.

So far this year, stocks have been on a tear. The Standard & Poor's 500 Index has risen 6 percent, and while the ordeal in Cyprus may have added to volatility this week, it hasn't halted the market's overall rise. Investors, quite simply, have grown weary of politically fueled crises, whether abroad or at home.

"People are worn out on the manufactured 'crisis du jour' out of Washington -- a fiscal cliff at year end, then a sequester cliff and next a debt ceiling cliff," Doll said. "Most people want to return to their own lives. Businesses want to make capital investments, hire people, do what it takes to grow sales. Consumers want to spend money, improve their homes, buy new homes, educate their children, and maybe, just maybe, some of them even want to save a little for retirement."

If the past five years have taught investors anything, though, it's that in a global market, big swings can spring from small problems. …

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