After a nice market rally, it’s useful to step back and remember why you didn’t go full tilt into the markets earlier, to remember that there are a lot of risks out there when considering your investment management strategy. Perhaps more than there were a year ago.

Example: Europe is sick, and it might be running out of time to rescue itself before something bad and unexpected happens.

At least this is what the numbers scream—especially those found in large public and private balance sheets. The Street? It uses words like “soft” and “lackluster” to describe European conditions—but otherwise sees no reason to doubt an upward trajectory from here.

The Economist recently called Europe “The world’s biggest economic problem,” stepping closer toward what would be the third recession in six years. Deflation is already a fact of life in a number of European countries. Around the Mediterranean persistently high unemployment among younger workers is not just a fiscal threat—a mismanaged welfare state requires, at the very least, a large number of productive tax payers feeding current beneficiaries—but also an existential threat: how do nations change politically and culturally when a system fails to utilize the human capital of a generation?

If history has taught anything, it’s that the viscous cycle of debt and stagnation can lead to a wide berth of dangerous and complex contingencies.

A sensible and bold fiscal solution looks improbable today. Germany insists on austerity measures while other countries have avoided reforms. Populism is on the rise on the continent.

All of this puts more pressure on the European Central Bank (ECB) to act. To date the ECB has relied more on jawboning support than actually implementing the kind of bold and creative stimulus measures done by the U.S.’s Federal Reserve. The Fed has just concluded its “Quantitative Easing” campaign where it’s bought (with printed money) massive amounts of longer term mortgage and Treasury securities driving, in theory, longer term interest rates downward. The ECB has refrained from similar measures, in part because European law prevents the ECB from buying new government bonds.

Deflation—and all its effects—looks highly likely without a bolder ECB.

Conventional wisdom today says the U.S. is “de-coupled” from Europe. It is true the U.S. is doing well relatively. The dollar is up, money from abroad is being reallocated to the U.S. We have been on a U.S. thesis for some time, and yet we wonder how long we can be in a “de-coupled” state. Add the troubles in Japan, China, and Latin America and our globalized world, and deflation has to be a consideration when investing money.

Investors have long been on a “beta” strategy: hedge funds to individual investors alike are buying baskets of stocks, including ETFs and other securities that deliver market returns. Few are actually looking at stocks individually and assessing their merits. Active investment management is dead, passive investing is in, so goes the convention wisdom.

There may be an opportunity by thinking the opposite. A selection of well-researched, defensible businesses with good economics (and reasonable-to-low prices) are probably a better bet than buying the market as a whole. What exactly you buy matters, not just how much you’re in for. We are seeing good businesses and bad business being valued the same. In other words, quality is cheap if not free in today’s market.

Just think of the global situation, and quality and incorporating a “margin of safety” when approaching investment management seems as important as ever.