While the legal definition of causa proxima is captured in the aforementioned quote, I often use the phrase in describing why the media is always looking for a proximate cause as to why the markets went this way or that. Back in the 1970s, when the markets would do this or that and nobody could figure out why, we always blamed it on the Middle East wealth funds because NOBODY knew what they were doing. Over the past few weeks, however, as the equity markets became more susceptible to the downside, the media’s causa proxima has been fears that, if the UK leaves the EU, it could cause a domino effect as other countries leave, as well. I would remind folks that even if the Brits do “leave”, it will be a few years before the separation process would be complete. I would also remind investors that my contacts in the UK do not think a “leave” vote is a fait accompli. In fact, if the vote is to “stay,” it could spark a pretty dynamic rally for the world stock market.
Causa Proxima
June 17, 2016
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