Thursday, April 27, 2017

You should own European stocks


We're living in very volatile times. We don't know what to expect.

Most Americans are not well-diversified globally. When we're talking about the 'Trump effect,' that is primarily a U.S. effect. You can solve that problem by diversifying around the world.

Europe should be a big thing in one's portfolio. Their price-to-earnings ratios are much lower. It looks bad because they've been through troubles recently. But people sometimes exaggerate those troubles.

We have a lot of bad narratives about Europe. But you have to think back at the long history. Europe has done quite well.


Sunday, April 2, 2017

High CAPE ratio making me nervous

It's already high enough to make me nervous ... the CAPE ratio is one of the best indicators, or I might say the best indicator, if you look at one alone, for the outlook in the long run for stocks. It's high now; and in the past when it's been this high, it hasn't done well.

I'm just playing the game a little bit here, and thinking, in the shorter run, this rally — I can start to see reasons for it, and I'm thinking about those reasons.

This is not a typical bull market with a lot of excitement. It's more of an anxious market where people are afraid of secular stagnation, of losing their jobs to foreigners, or to computers. And they have kind of a wishful-thinking bias about investments like stocks. It's the only way I can understand it. 

I'm not going to plunge into the market. I'm holding steady; I'm not pulling out, either. If I was giving you advice: Do nothing. Don't pull out. Don't go in," the Nobel laureate economist said Tuesday. "I'm sounding very standard right now. I still suspect there is more left in the Trump rally.