{"id":38978,"date":"2013-06-13T01:54:01","date_gmt":"2013-06-13T05:54:01","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=38978"},"modified":"2013-06-13T01:54:01","modified_gmt":"2013-06-13T05:54:01","slug":"chart-reveals-the-best-contrarian-buying-opportunity-in-30-years","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/06\/13\/chart-reveals-the-best-contrarian-buying-opportunity-in-30-years\/","title":{"rendered":"Chart Reveals the Best (Contrarian) Buying Opportunity in 30 years"},"content":{"rendered":"

By WallStreetDaily.com<\/u><\/a> <\/p>\n

Get ready to stretch your contrarian muscles.<\/p>\n

As you know, I\u2019ve been on the hunt for undervalued investments in what\u2019s becoming a slightly overvalued world.<\/p>\n

And I just found such an opportunity.<\/p>\n

It\u2019s historic, too, since it could be another 30 years (or more) before we get an opportunity to buy this cheaply again. But pulling the trigger is going to require some serious<\/i> intestinal fortitude.<\/p>\n

So let\u2019s see if you\u2019ve got what it takes. (FYI – Warren Buffett does.)<\/p>\n

Dumpster Diving in the Eurozone<\/b><\/p>\n

Lingering financial turmoil. Social unrest. And an economic rebound that seems a long, long<\/i> way off.<\/p>\n

That (still) pretty much sums up the conditions in Europe.<\/p>\n

Yet now could be one of the best times – ever – to start scooping up the companies that are largely responsible for the region\u2019s debt crisis: banks.<\/p>\n

I know. The thought probably repulses you. However, as Daniel Hemmant at BNP Paribas Investment Partners recently told CNBC, European bank stocks haven\u2019t been this cheap in 30 years.<\/a><\/p>\n

He\u2019s not exaggerating, either.<\/p>\n

Since 1987 (when the first episode of \u201cThe Simpsons\u201d aired), the average price-to-book (P\/B) ratio for European bank stocks has clocked in at 1.87.<\/p>\n

Today, they\u2019re trading at an average P\/B ratio of 0.78 – a staggering 58% discount to the long-term average. That\u2019s based on the STOXX Europe 600 Banks Index, which is a diversified mix of 46 of Europe\u2019s banks, including most of the largest ones.<\/p>\n

What\u2019s more, these bank stocks aren\u2019t simply dirt cheap in relation to their historical valuations. They\u2019re cheap relative to other popular investments right now, too. Namely, U.S. bank stocks, Chinese stocks and Japanese stocks.<\/p>\n

Take a look:<\/p>\n

\"\"<\/p>\n

Now, as far as investing, we have two ways to capitalize on the bargains\u2026<\/p>\n

We can either scoop up individual banks that are trading at even steeper discounts than the average – like Barclays<\/b> (BCS<\/a>), Credit Suisse Group AG<\/b> (CS<\/a>), or Deutsche Bank AG<\/b> (DB<\/a>).<\/p>\n

\"\"<\/p>\n

Or we can opt for a more diversified approach\u2026<\/p>\n

Specifically, buying a low-cost exchange-traded fund with significant exposure (more than 50%) to European banks – like the iShares MSCI Europe Financials ETF <\/b>(EUFN<\/a>).<\/p>\n

Follow Buffett, Not the Crowd<\/b><\/p>\n

In the end, if investing is all about buying on the cheap, it doesn\u2019t get much better than this. So what are investors waiting for?<\/p>\n

Well, most want conditions to improve dramatically in Europe before they put any hard-earned capital on the line. Essentially, they\u2019re waiting for an \u201call clear\u201d signal before buying. But that\u2019s a costly mistake.<\/p>\n

Just like we witnessed with residential real estate investments, the profits start piling up when conditions move from bad to \u201cless bad.\u201d And by the time conditions get back to normal, it\u2019s too late.<\/p>\n

Or as Hemmant says, \u201cUsually the right time to buy cyclical stocks is at the bottom [of the] cycle\u2026 It\u2019s never a comfortable thing to do.\u201d<\/p>\n

He\u2019s right. Being a contrarian is never comfortable<\/i>. But it is profitable<\/i>.<\/p>\n

And the current opportunity in European banks won\u2019t be an exception.<\/p>\n

\u201cWe are somewhere around the bottom of the cycle [for European banks],\u201d says Hemmant. I concur.<\/p>\n

And that means it\u2019s time to step up and buy – or be sorry we didn\u2019t later on.<\/p>\n

Still scared? Maybe this will help you overcome any anxiety related to buying European stocks\u2026<\/p>\n

Warren Buffett\u2019s doing it! And if it\u2019s good enough for him, it should be good enough for us, right?<\/p>\n

He recently told CNBC that he\u2019s been buying \u201csome European stocks and companies in the past year.\u201d<\/p>\n

What\u2019s more, he echoed the same sentiments I\u2019m sharing today, saying, \u201cWe bought stocks when the United States was in trouble, in 2008\u2026 It wasn’t because the news was good; it was because the prices were good. And if you believe that Europe is going to be around, which it certainly is\u2026 then you actually look at troubles as possibly being an opportunity to buy.\u201d<\/p>\n

Agreed!<\/p>\n

Bottom line: The news coming out of European banks isn\u2019t good. Yet. But the prices are. So hurry up and buy, before it\u2019s too late.<\/p>\n

Ahead of the tape,<\/p>\n

Louis Basenese<\/p>\n

The post Chart Reveals the Best (Contrarian) Buying Opportunity in 30 years<\/a> appeared first on  | Wall Street Daily<\/a>.<\/p>\n

Article By WallStreetDaily.com<\/u><\/a><\/p>\n

Original Article: Chart Reveals the Best (Contrarian) Buying Opportunity in 30 years<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By WallStreetDaily.com Get ready to stretch your contrarian muscles. As you know, I\u2019ve been on the hunt for undervalued investments in what\u2019s becoming a slightly overvalued world. And I just found such an opportunity. It\u2019s historic, too, since it could be another 30 years (or more) before we get an opportunity to buy this cheaply … <\/p>\n

Continue reading “Chart Reveals the Best (Contrarian) Buying Opportunity in 30 years”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-38978","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/38978","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=38978"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/38978\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=38978"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=38978"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=38978"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}