Markets yo-yoed this week on news of Europe’s progress and lack of it in addressing their increasing debt concerns. Domestic economic news, both good and bad had little impact indicating that Europe’s problems may ours for months to come.

Psychologists have uncovered a fascinating phenomenon about people at the racetrack. The moment after placing their bet on a horse they become much more confident of their horse’s chances of winning than they were immediately before placing their bet. Is it possible that the very same thing happens the moment we invest in a stock or a mutual fund? 

How many times and in how many situations lately have we heard the familiar refrain we’ve never seen anything like this? Whether the subject is politics, housing, jobs, stocks, sovereign debt, corporate ethics, or American wars, experts find themselves unable to find comparison or remedy. Having no historical frame of reference makes us anxious. We naturally prefer familiarity over the unfamiliarity. We like trends and historical context on which to base our projections. We do not like unproven ideas. 

There was scant positive news this week offering hope to those still optimistic the US and global economies can avoid a recession. The government’s third and final revision of economic growth (GDP) for the second quarter was revised up to 1.3% from 1%, however still quite anemic. German lawmakers quelled short-term fears by approving an expansion of the euro-area rescue fund which allows European policy makers to focus on next to blunt their debt crisis. They will likely leverage the fund as the US did in its own crisis in 2008.