With negative headlines around everything from refugees to elections to the euro, you could be forgiven for thinking Europe is still in crisis mode. The truth is negative headlines can obscure the larger picture.
Here are three reasons to stop discounting Europe.
None of this means it will be all clear sailing ahead. Fears over the future of the European Union may have diminished following far right candidate Marine Le Pen’s electoral loss in France. However, risks of a breakup are still relevant—and were incorporated into the scenarios we took into account when deciding on our portfolios’ investments in European stocks—but we are convinced they are outweighed by the compelling long-term opportunity. Based on the first quarter’s stock returns, markets are starting to bear that out. With the economy recovering, and the euro’s cheap valuation, we’re also now comfortable moving to an unhedged position.
As we’ve seen, particularly as of late, investor sentiment can shift quickly. Sitting on the sidelines waiting for the perfect moment to invest is a good way to miss opportunities, particularly in a market the size of Europe’s. We are constantly reevaluating our views, and we’re willing to ride out short-term swings as long as we believe they will play out in the long term. That’s also how we approach wealth management in general, always considering the bigger picture and how the individual pieces will work together to help our clients reach their goals.
Do you have more questions or want to discuss the topics covered in this post? Please call your Litman Gregory Wealth Advisor or contact us here.
Commentary from Our CIO—Second Quarter 2021
Global stock markets continued to surge in the second quarter. In our assessment of the macroeconomic backdrop and outlook, we continue to expect a strong global economic recovery over at least the next 12 months. In this quarterly commentary, our Chief Investment Officer, Jeremy DeGroot, reviews the current reasoning for our portfolio positioning, outlook on inflation, and forward-looking scenario analysis on the broader economy and markets.
Research Update: Increased Return Expectations for U.S. Stocks
As the economy and financial markets continue their recovery from the pandemic’s impact, our recent analysis resulted in improved expected returns for U.S. stocks. In this post we summarize our analysis and why we think an increased allocation to U.S. equities could benefit the risk-adjusted return profile of our portfolios.
Advisor Q&A: Tax Planning and the American Families Plan with Senior Advisor Chris Wheaton
The American Families Plan was recently released by President Joe Biden and includes many of the provisions outlined during his campaign. We asked Litman Gregory Senior Advisor, Chris Wheaton, to answer some questions about key proposed tax law changes, and related tax planning ideas for our clients to consider in 2021 and beyond.