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.
Our Perspective and Strategy During Turbulent Times
It’s been a difficult year, to say the least. As September comes to a close, we’ve weathered a disappointing month in the financial markets after a relatively benign August and a strong July. As is the case in any bear market, investors are braced for more to come. In this post we provide a summary on the forces that brought us here, how we’re responding, and what to expect going forward.
With Inflation Rising, Why Have Inflation-Protected Bonds Declined?
As the outlook for inflation turned less “transitory,” treasury inflation-protected securities became interesting to many investors. But these bonds have shown they aren’t immune to broader bond market declines, leaving investors to wonder, “How can my inflation-protected bonds be down when inflation is on the rise?” In this post we explain how these bonds are impacted by different market variables, including inflation, and why we believe they still deserve a place in our client portfolios.
I Savings Bonds Currently Offer a Generous Yield
With current yields over 9%, Series I Savings Bonds seem to offer a "free lunch". These bonds are issued by the U.S. Government and pay interest linked to current inflation rates, making them an attractive option for most savers and investors.