Europe looks cheap to me

Monday, 16th April 2018 14:50 - by Ranjeet Singh

Despite the fact that I believe that the market could suffer a crash either this year or next. that is not to say that I am not investing or that you shouldn’t either. After all investing in the markets whilst simultaneously protecting a portfolio using hedging strategies is not the same as sitting in cash and watching your money dwindle away into the abyss through inflation.

So, with that mindset, and assuming that you agree with my hypothesis the next question is where do you invest?

Well, US technology stocks certainly are not flavour of the month. What with Trump’s tweets on Amazon (which recently cost its founder Jeff Bezos a cool $7 billion) and Mark Zuckerberg’s inability to either keep our data safe or get a decent haircut, the stock market across the pond should probably be given short thrift for now at least.

The UK isn’t looking too clever either and the Brexit debacle will only get worse as the deadline for exit nears, especially with the internal issues and infighting from our minority puppet government that is being held together by the DUP; hardly a formula for success

Emerging markets are still good but risky and not appropriate for all investors so that only leaves a few key geographical areas left to consider; I won’t go through them all now but each has its pro and cons – as you probably know I am a big fan of Vietnam for example.

Another area which I think could be of interest is Europe. Recently Europe has fallen pretty harshly but that is largely because of the impending trade war between Trump and China. You see Europe is more affected than either the UK or the US by a trade war because it is involved more in global trade and so it impacts their GDP disproportionately.

That said and assuming that the trade war fizzles out into no more than a playground fight rather than a full blown ‘war’ as its name suggests, then now could be a time to look at European Investment Trusts in particular which is what I have been doing for my clients. Of course, remember that you still need hedging in place to protect against the market risks.

Europe is also particularly interesting because it is not likely to raise interest rates any time soon, it is still printing money through QE (although that is being tapered in by Mario Draghi, ECB president) and most important of all for me at least, the valuations in Europe are considerably less than those in the UK and US in particular.

All in all, Europe is probably as good a place as any to put some money into if you know where to invest.

Watch today’s short video at https://youtu.be/vq2LsnNIOK8

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.