Markets around the world are breaking down. But as we've written recently (here and here), this volatility is likely overdone. And it's creating real opportunities.

Most investors are focused on the U.S. today. But one of the biggest opportunities isn't at home... It's in Europe.

Let me explain...

Yes, stocks have been volatile, and we have hit some stop losses... But looking at the bigger picture, European stocks are a fantastic opportunity – an even better one than U.S. stocks.

U.S. stocks have gone up for six straight years. And they're only down 4% in 2015 after the recent fall. European stocks haven't gone up nearly as much...

Europe's major blue-chip index – the Euro STOXX 50 Index – was up in just three of the last six years. And it's down again this year. Take a look...

The S&P 500 is up around 65% over the past decade (not including dividends). The Euro STOXX 50 Index is down 8% over the decade (not including dividends and in U.S. dollar terms).

This incredible divergence in performance has made Europe's stock market cheap. Take a look...

	Price-to-Book	Price-to-Sales	Div. Yield
S&P 500	2.6	1.7	2.2%
Euro STOXX 50	1.4	0.9	3.8%
Discount	-46%	-47%	-42%

European stocks are more than 40% cheaper than U.S. stocks when you look at some major value metrics, including price-to-book, price-to-sales, and dividend yield.

Looking back over 30 years of historical data, whenever European stocks were 40%-plus cheaper than U.S. stocks, European stocks outperformed U.S. stocks over the next year, three years, and five years.

In short, we want to own European stocks when the uptrend returns. The eurozone economy is the world's largest... and yet its stock market is an incredible deal relative to U.S. stocks.

When I look at Europe today, I see the U.S. a few years ago...

Here in the U.S., unemployment is down, stocks are up, and the economy is slowly ticking higher. Because of that, we're on the verge of higher interest rates from the Federal Reserve. But not in Europe...

Earlier this year, European Central Bank President Mario Draghi put Europe's own quantitative easing (QE) program into place. Europe's central bank is just now starting the money-printing process in hopes of igniting the area's economy.

Of course, this will lead to increases in asset prices, like we saw happen in the U.S.

Europe's stock and property markets will likely soar in response to this program. And higher interest rates won't appear in Europe for years.

European stocks should be a fantastic opportunity, particularly when the uptrend returns.

Good investing,

Steve

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2013 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.