I am not talking about that Europe would outgrow the World. No.
European trend growth is still pretty unimpressive – it is the Old World, after all!
But, the magnitude of a cyclical downturn, that I expect in many parts of the world in 2017 should be less painful.
And many European equities still look attractive.
Here is why:
9 reasons to buy Europe:
- Europe is cheaper by 2-3 turns on normalized P/E multiples
- European companies offer a higher dividend. 4-7% dividend yields are ubiquitous. Try to find 7% dividend in the US!
- Europe was the last major region to exit a recession (the Euro-crisis). Therefore, Europe didn’t benefit from that cyclical upswing that the US economy enjoyed post 2009.
- While the US was enjoying all-around stimulus, many European countries were doing fiscal belt-tightening. Too young to remember the Spanish and Italian and Irish budget cuts?
- Many European countries went through some structural reforms (which received little publicity and almost no credit). But they really did.
- Now politicians and Central Bankers in Europe are debating and implementing some stimulus measures – perfectly timed!
- Euro got weaker and the USD stronger, obviously, making Eurozone more competitive
- In the face of deflating commodities, Europe would benefit more from being a commodities consumer than a producer
- This is one is purely emotional….Well, Europe is, just, so beautiful!
So, leave some room in your portfolio for European stocks – buy them well.
You would feel good about flying to Europe (with your family) and spending your money there!
Hey, that way your money would work there twice, which is nice…
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