As each day passes, I’m finding European markets, specifically countries that are on the Euro (ex UK), to be an attractive investing opportunity.
A detailed analysis was laid out in a prior post (extra plug) (http://ibankcoin.com/boyaj/2015/11/09/overseas-investing-opportunity/). At a high level, my reasons were a strong dollar making America’s exports expensive and European imports cheap, and QE albeit on a smaller scale than ours, will drive up equity prices.
Here are a few others.
First, the smartest bond investor, Jeff Gundlach aka The New Bond King aka Gross Reincarnate Sans Militia Management Style, is highly questioning the logic behind a rate hike.
He recently pointed out that Eurozone nominal GDP, while 0.5% less than US, is trending up, whereas America’s is dropping. Also, inflation (or deflation, depending on what camp you’re in) rates are basically the same. Basically, he’s questioning the logic that the Fed is insistent on tightening while Eurozone is easing.
I’m listening to the guy who manages $80B in assets over a lady that prefers the thermostat at 78 degrees year round and her drunk academic minions.
Second, even though the US market is running to upside despite a FOMC minutes indicating a possible December hike, I am under the belief that European equities will look relatively attractive due to participants speculating that there will be multiple rate hikes.
Lastly, and self-admitted shamefully, is the fact that markets tend to do well in times of war. They are weak with the PROSPECT of war because that brings uncertainty and volatility.
What happened in Paris was disgusting, somber, and gut wrenching. My heart goes out to the victims and families, and there isn’t one logical reason why this type of horror should ever happen.
With that being said, I love to have my cake and eat it too; I’m all for destroying terrorists and making money, it’s truly a win-win.
I went long FEZ (European Large Cap ETF) today a few minutes before the minutes were released.
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What about currency risk? Downside on that potentially 5-10%.