European Stocks: Buy Them While They’re Cheap


In the years I was a financial journalist, it always surprised me how reluctant many of us are to invest outside our country’s borders.

But with the U.S. stock market at all-time highs – and at stretched value levels not seen since 1929 and 1999 – there’s never been a more important time to diversify your profits from stocks outside America’s borders.

European stocks, for instance.

I’ve been a bull on European stocks since April last year, when I called it the “economic Cinderella story of 2017.” I bet that the region’s consumers, as well as its troubled banking sector, would surely benefit from an upturn in confidence and eventually higher interest rates too.

Looks like I was right. Recent data from the European Union shows economic confidence across the euro zone hit its highest level in 17 years.

And when the EU reports its quarterly and annual gross domestic product later this month, the euro zone may well have grown even faster than the U.S. during 2017. An analytics firm called Capital Economics predicts the euro zone grew by 2.4% last year, compared to a U.S. forecast of 2.3%.

But while the U.S. is already on the road toward higher interest rates – a boon for bankers, credit card companies and savers everywhere – Europe is still fumbling to get its map out of the glove compartment.

Europe’s Economy Is on a Tear

The European Central Bank (ECB) said in December it would keep the euro zone’s interest rates at essentially zero.

The ECB’s president isn’t exactly a hawk on monetary policy. But we’re already seeing plenty of hints that the ECB may start signaling a change in its inflation stance from, let’s say, “more dovish” to “less dovish.”

And since rising rates make a currency more attractive to hold, the news was enough to strengthen the euro to its highest level versus the dollar in four years.

The point is, Europe’s economy is on a tear.

And I still like the prospects for Europe-focused exchange-traded funds (ETFs), especially those geared toward the financial sector, like the iShares MSCI European Financial Sector ETF (Nasdaq: EUFN). Since August 2017, it’s up 10% and has more to go.

The same can be said for the Vanguard FTSE Europe ETF (NYSE: VGK).

European Stocks Are Cheap

European stocks also remain a place to find a better value compared to the U.S.

Recently, global value maven Ed Yardeni’s team updated their price-to-earnings ratios for indexes representing the U.S, Europe, Japan and the U.K.

They found a curious fact: Out of the world’s four major advanced economies, Europe remains the cheapest market to invest in. The U.S. market remains the most expensive.

Lastly, we are nearly a decade into a full-on runaway bull market. I believe we could see a large sell-off starting in the market any day now as investors finally cash in profits from the past year. It will scare a lot of people, no doubt.

Europe’s cheaper stock markets are a great place to “hide out” when that sell-off finally gets underway.

Source by Jeff L. Yastine


  1. I simply want to say I’m new to weblog and honestly liked your web page. More than likely I’m planning to bookmark your website . You really have wonderful articles. Thanks a lot for revealing your blog.

  2. Hi there! This is my first visit to your blog! We are a group of volunteers and starting a new initiative in a community in the same niche. Your blog provided us beneficial information to work on. You have done a outstanding job!

  3. Simply want to say your article is as astounding. The clarity in your post is simply great and i can assume you’re an expert on this subject. Fine with your permission let me to grab your RSS feed to keep updated with forthcoming post. Thanks a million and please continue the gratifying work.

  4. Just wish to say your article is as surprising. The clearness in your post is simply cool and i can assume you are an expert on this subject. Fine with your permission allow me to grab your feed to keep updated with forthcoming post. Thanks a million and please keep up the rewarding work.

  5. And in any representation persuasion in be au courant that no grease, measured simulate admissible ones, should be considered a weight-loss food. Coating your salad with grease can attractive up as unexpected calories as a excision pick up of in something ice cream. It’s a disordered victuals as a replacement as contrasted with of losing greatness, and starting your day.

  6. You can definitely see your expertise within the work you write. The sector hopes for even more passionate writers such as you who aren’t afraid to say how they believe. Always go after your heart. “The only way most people recognize their limits is by trespassing on them.” by Tom Morris.