By Peter Switzer, Switzer Super Report

It's been another week where stock market optimism was actually given a chance, with US housing data looking unquestionably better than it has for years. So we now have to see if the EU leaders can spoil the party with a crucial summit over the next two days. It's euro-anxiety again!

As an advocate of long-term investing and a follower of Warren Buffett's advice to be greedy when everyone is fearful, I know the worst will eventually be behind us and stocks will soar, but it is the waiting game that is hard to cope with for most investors.

Waiting for the rally

During the week I interviewed Matthew Kidman, who writes in the Sydney Morning Herald, was a fund manager at Wilson Asset Management and who wrote the book Bulls, Bears and a Croupier Who Stopped Gambling and Made Millions. Kidman is a stock market historian and thinks we are in the last year of a secular bear market and it turns around in 2013, though he says it could start in the last quarter of this year.

He confirmed IBISWorld's Phil Ruthven's claim that when the market decides that the worst is behind us, it will spike by 40% in one year. Kidman says it could even be 60% and so this is the kind of gamble that we face in deciding to be in or out of the market.

Those who have heeded my historical warnings to 'sell in May and go away' and then get back in for a Christmas rally have done well, but this is market gambling that most SMSF trustees are willing to play.

By the way, Michael McCarthy of CMC Markets knows there are reasons to be fearful right now with our financial fate in the hands of the EU. However, he sees reasons to be optimistic on stocks, including the VIX, or fear index, in the US, which is now below 20. To put that in perspective, this hit a reading of over 80 at the height of the GFC!

Recovery news

Another good sign to emerge this week came from the US where home sales, home prices and pending home sales came through positively and with historically significant improvement. Economists know that a lasting economic recovery needs to have a strengthening housing sector as the foundation and that has been missing in the States since 2007.

Now this is all of the good stuff, but the bad stuff remains and it will be spotlighted in Brussels at the EU summit. I loved the heading from a Reuters article that summed it up neatly with: "It's the Politics, Stupid."

Bill Clinton, of course, made "It's the economy, stupid," famous and it has become the basic tenet of most political debates. But right now, it's politics that is holding up the solution of Europe's economic problem ? particularly Angela Merkel and how she is bowing to Germany's fear of being dragged down by its EU indebted partners, the PIIGS (Portugal, Ireland, Italy, Greece and Spain).

Create growth

Sure the PIIGS have to clean up their act, but they also need growth to bring down unemployment and create economic growth so they can collect taxes to use to pay back their debt.

Right now, Germany's view is treat 'em mean and they'll be keen, but this is like asking someone on the dole to pay off a home loan.

I say giving them work, making them put in the long hours and garnisheeing their wages to cover their debts is a better approach for an individual who is in debt compared with the soft option of letting them declare bankruptcy. The EU officials have to come up with a better solution or else stocks will continue to struggle.

I'd love to finish with "Go the Europeans!" but these guys have sapped me of my usually unbridled enthusiasm for optimism. Hey, that could be a good sign as Kidman argues the market comeback follows a feeling of capitulation, where even the most positive investor says that he or she has had enough.

I hope we can avoid that market development and that's why this EU summit is important. It is also why I have euro-anxiety again.