Tag Archives | Europe

European stocks to reward the patient investor?

Based on the maxim that “when a consensus grows strong enough, there are great profits to be made from betting against it”, John Authers made a case in the FT recently for investing in European stocks, albeit “for those with patience”.

The current consensus, established once markets began to rally after the 2008 financial crisis, is that “the US will be fine, while Europe will not”.

Whilst agreeing that this is in fact based on reality and also that established market trends can continue long after the reality that established them has altered, Authers suggests that the current price of US and EU stocks compared to their respective average earnings can only be justified if the US boom continues while Europe falls further into recession.

This he says is “hard to swallow” with European corporates now “positioned for a revival”. Also the US economy could grow too fast, sparking inflation and causing higher interest   rates that would hit share prices.

The conclusion is that the US cannot continue to stand alone and the consensus on growth stateside will actually pull the eurozone with it. Hence “European stocks will outperform US stocks over the medium term”.

Patience

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Video

Video : Strategy Update – A US Led Recovery

Bernard Doyle, head of JBWere Investment Strategy, presents a high level investment strategy update for investors. For now, they see a US led recovery continuing and remain overweight equities. However they believe that we are now in a low return world, in the late stages of the equity market recovery, and they expect, by the end of this year, to have a more neutral allocation to equities. It also covers global earnings and valuations, stabilisation of world growth, China and Europe and tactical asset allocation. Well worth a watch, click on the image below.

Strategy Update JBWere Screenshot

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