It is probably with a cruel sense of irony that my high school French teacher dragged me through a section of French Literature called the Theater of the Absurd (Théâtre de l’Absurde). Samuel Beckett’s play “En attendant Godot” formed a part of that journey for me. The play centers around two characters who are, as the title suggests, waiting for Godot. The play drags on for pages and pages of tedious back and forth between Vladimir and Estragon and a few others who wander along the road. The frequent refrain meant to justify all this nonsense is that, well, they are waiting for Godot. Needless to say, the play ends without an appearance from Godot.

The reason I have channeled this unpleasant memory from decades past is because it helped me zero in on my feelings of frustration. My French teacher sandbagged me with Samuel Beckett’s dreary drama just as the leadership of the US and EU has inflicted the Absurd saga of the twin sovereign debt dramas upon me as an investor. While many will see the congressional action over the weekend as the end of the US part of the play, the one thing I learned in French class those many years ago is that we are only finishing Act 1. After a short relief rally, the market should fizzle as the audience (investors) realizes that there is an Act 2 and that the action is unlikely to prove any more inspiring than Act 2 of Beckett’s play.

The European story is perhaps more depressing because even when the Greek Sovereign Debt Crisis Drama runs out of steam (we are only at August Euro Beach Holiday intermission), there are plenty of other European venues ready to stage the play. Right now, it looks set for a five city run.

Why only the end of Act 1?

Because, if one actually reads what has been agreed (Bloomberg article), the headline figures barely last much past the second paragraph. Super committees will be set up and no doubt overlooked. Automatic cost controls will be established and no doubt ignored. Both sides can declare victory because very little has actually been achieved except for an agreement to allow the Treasury to borrow more money.

What should an investor do?

Probably raise cash into the “relief rally” that will kick off this week. If this weekend deal is the trigger event for the fall rally that we were looking for, then this rally will be a weakling.

Wait for the next boot to drop (which may be a threatened Moody’s downgrade) before loading up on risky assets with the cash you raise in the coming week. The Fund King Ratings are anemic, which is to be expected at this point. However, looking up from the figures, we appear to be stuck in the Theater of the Absurd waiting for this play to end. It will end at some point and not necessarily with a cataclysmic bang that will drive the price of Gold to $5,000 an ounce. At that point, we as investors can get on with our lives.

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