European Crisis or Buying Opportunity ?
- The events of the last weeks represent a very good buying opportunity for investments in Europe. Once again a number of events have caused overdone pessimism in the markets. Let's take the Greece crisis and protest as an example. The television broadcasting of the Greek riots projected the impression that a crisis in Greece is going to affect most European Countries. This is not the case.
- Investors, and I mean particularly retail investors, should focus on their portfolio fundamentals and asset allocation principle before becoming hostage of their own fears. A month ago I have recommended personal and household goods as a potentially defensive - yet lucrative - sector to invest. In the recent weeks the most important question was: what changed for the companies in this sector ? Are their earnings in danger given the situation in Greece? In most cases a simple analysis reveals that many of these European leading companies have a well diversified portfolio that certainly doesn't depends on market growth in Greece or other small European countries to deliver good results. So nothing changed but at a time where we can buy at very good valuations many investors turn fearful and sell in the worst possible time.
- Spain Downgrade: I think that it is time for the rating business to present with a European alternative. Apparently the markets have short memory and do not want to remember that these monopolistic rating companies are the same that rated "AAA" the toxic mortgage asset that American banks sold throughout the world, including Europe !
- The European intervention has been adequate but will take some time to be noticeable by the markets. For this reasons we have now several good European companies at good valuations. This is a good buying opportunity and there, at this stage, no reason to be too fearful.
- As a strategy I would focus on Swiss and selective European companies/sectors with multinational activities that will likely not be impacted by these negative scenarios for example Food and beverage Consumer staples, pharmaceuticals. In addition I would accumulate commodities like Oil and industrial metals that are now at a very good entry point as an hedge against inflation. It is essentially to remain invested and have a good amount of cash to take advantage of opportunities.
Reader commentary
Zouhair Al_tabsh
August 15th, 2010 at 11:41pm
The new financial schemes that defer from the sorrowful past shall be considered referring on these basics: First, the acceptance that all nations have to live in peace with fulfilling their rights, and wars are not the cause for any financial schemes. Second, the fight should be against the Mal-Behaviorism, Hunger, Poverty, Ignorance, Diseases, and the misunderstandings and distrust that are the true enemy of all nations. Third, Bassoonist economies are prohibited. Fourth, The reality that we all worship one creator is GOD, ALLAH, and no one has a different one, and specifically the monetary worship, to ask for more and more and there are no limits to reach by stepping on the bodies of others, which are wrong doings and non merciful schemes, there must be feelings with who are in need, by that people come together to each other in care and then the trust we all are looking for from long years. Fifth is to be realistic and modest to serve the Humanity together as all nations shall be in prosperity for long long time, as we all are looking for. Sixth, peace is affordable but with accepting others sufferings solving and providing them their missed rights and will, by that we all mankind shall have better life and preserved the higher values and offered the means to all the people shall follow for the best life they could ever dream or think of. Seventh, tech has to be directed to explore the science in all the fields of necessities to the development not in the directions of the destructions and wars, thefts, diseases,... Eighth, we should never the achievements are all negatives from the past, although it was inhuman and millions were victims and killed without mercy, and a lot of rights of free people were surrendered without any mercy or justice. But the past should be in the past and who needs and wants to have a better day to come to build the prosperous future for all the world all have to build in mercy, trust, righteous of peoples, humbly and generously and especially that there are no race is better than others, but in the believe in GOD, and in their good values, manners, modestly, doings and giving. Seventh, I believe that GOD has not created us and all this life for vain or for wars or for money greediness. We have to come together to feel with each other and work to flourish the simple pleasant healthful contented life in worship and work for good human hood. Everything is simple but with a truthful sincere will and believe in GOD and pleasant step.
I believe this could be accomplished but the real question who are really need and want what they are really in need and are looking for???
Just look up and ask truly and look down and also truly and then move forward truly to serve GOD and then the peoples all the peoples.