Norm Conley
Subprime: today's monster in the closet
3/19/2007 3:00 PM EDT
For those of you who think that the market is headed to hell in a handbasket because of subprime loan problems, rest assured that lots of very smart people share your point of view. [Meint er offenbar ironisch als Kontraindikator - A.L.] Over the past month, thanks to our handy site archive tool, I see that there have been over 400 articles referencing "subprime" on Street.com sites over the past month. Type in "subprime problems" on Google, and you get more than 1.3 million results, which is slightly more than the 1.1 million hits you get when Google "Anna Nicole funeral." Just about everyone knows that there are big problems in subprime.
Could subprime be a catalyst for a disaster that unravels the entire stock market? Sure it could. Anything can happen. But the likelihood of a market event occurring is inversely-related to the number of people who are predicting such an event. Since lots and lots of people think that subprime problems are very worthy of our rapt attention, I deduce that a subprime-led market crash is a very remote possibility. Investors should plan for it like they plan for other remote possible occurrences like natural disasters, terror acts, pandemics, etc. Which is to say, if you are spending way too much time thinking or worrying about subprime because the internet and CNBC tell you that you should worry about it, you should probably grab a cup of tea and chill out.