When Those 'In the Know' Don't Know

Tickers in this article: PVH RDN
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Is the smart money too smart?

Beginning Sunday I was bombarded by people far more intelligent and informed than I am about how the plan to tax depositors in Cyprus could be the most important story in ages. In a 24-hour period starting Saturday morning, I received almost hourly bulletins about how deposits are sacrosanct and the precedent of confiscatory taxes in Cyprus meant that individuals all over Europe and perhaps even the United States would be pulling out money from the weak banks, causing the long-awaited collapse of the banking system in Europe and the euro in general.

This was hard for me to grasp. I didn't know Cyprus and I didn't know the impact the country's woes had on us.

I didn't need to worry. Others had summed it up for me. Europe would open down 5% and we would open down 2-3% because this was a VERY IMPORTANT NEGATIVE.

This article originally appeared on March 22, 2013 on RealMoney. To read more content like this + Jim Cramer's $3 Million portfolio for FREE Click Here NOW.

Frankly, I thought this was ridiculous. The market's been incredibly strong, too strong perhaps. It was due for a pullback. This might give you a pullback so you could get in.

My calculus was viewed as naive and unsophisticated by everyone I chatted with or e-mailed.

Didn't I know how big the banks were in Cyprus, flooded with Russian hot money? Didn't I know that this was Lehman No. 2 because the European authorities, like the American authorities stupidly before them, decided to draw the line to punish the ne'er-do-wells and simply didn't understand the consequences?

I tired of this debate. I tired of it because I understand something the really smart people didn't know. I knew that our market had finally divorced itself from Europe.

Here's why.

First, Europe used to mean a lot to us, even as recently as a year-and-a-half ago. Our banks were their banks. Our companies were their companies. The weak euro would hurt our exports. The litany was cut and dried.

What the REALLY SMART people haven't realized yet is that most financial and industrial companies in America have pulled back or minimized their businesses in Europe because they figured out that they would be punished in the marketplace if they stayed big there.