If you are one of those buy when there is blood in the streets types you have to be looking at Europe. I’ve heard the phrase “European Crisis” more often in the last three months than I’ve heard my own name.
CNBC is extending coverage into the evenings to keep us up to speed with the euro zone and its problems. On the one to ten panic scale I’d say the European situation is pretty close to an eight. With the fall of 2008 post-Lehman Brothers being a ten and any Gulf of Mexico related investment last summer being a seven.
A few years ago Buffett sat down for an afternoon with a S&P manual that listed Korean stocks during that countries financial crisis. He put together a portfolio of Korean stocks (for his personal portfolio) in a couple of hours that provided huge returns in the years following. Buffett ignored the horrible headlines coming out of Asia and instead focused on the ridiculous valuations that were being assigned to Korean equities.
Here is Buffett discussing that investment from a GuruFocus article:
http://www.gurufocus.com/news/4434/permanent-value-the-teachings-of-warren-buffett
A couple of years ago I got this investment guide on Korean stocks. I began looking through it. It felt like 1974 all over again. Look here at this company... Dae Han, I don't know how you pronounce it, it’s a flour company. It earned 12,879 won previously. It currently had a book value of 200,000 won and was earning 18,000 won. It had traded as high as 43,000 and as low as 35,000 won. At the time, the current price was 40,000 or 2 times earnings. In 4 hours I had found 20 companies like this.
The point is nobody is going to tell you about these companies. There are no broker reports on Dae Han Flour Company. When you invest like this, you will make money. Sure 1 or 2 companies may turn out to be poor choices, but the others will more than make up for any losses. Not all of them will be good, but some will and those will make you rich. These opportunities will be there in the next 30 years. You’ll have streaks where you’ll find some bad companies and a few times where you’ll make money with everything that you do.
It takes courage to buy at times like that and a belief that the sun is going to keep coming up every day even though at the time you are buying it may feel like it won’t. Over time things will improve and valuations will be less pessimistic.
With Buffett’s foray into Korea in mind I’m trying to look to opportunities in Europe. It isn’t easy to do as I don’t have any background with European companies so all investment ideas are starting from scratch. I’m looking to buy high quality companies, trading at junk prices.
It is much easier to know the sector before it sells off. That provides more confidence in times of distress as you know the businesses well.
I came across this article which details the thinking of a very successful investor who has been focused on Europe for a long time (successfully) and is wildly bullish on European stocks today:
Europe is bust, buy Europe.
That, at least, is the call from the smartest investor I know — Crispin Odey, a hedge-fund manager in London.
'It may be confusing to find someone who believes that a crisis is on its way but is also happy to buy equities ahead of the crisis,' he writes in his latest bulletin to investors. 'My reason is that the worries have been there for so long, the causes are so obvious and the valuations are so cheap that this is a case of buying early. For me the crisis will bring resolution and with it higher prices.'
(The resolution, he says, is that the banks there will need recapitalizing. It has to happen.)
The 'geopolitical outlook' for the world, Odey admits, 'is unresolvably bad.' However, at these levels investors are 'not only being paid to be patient by high dividend yields,” but shares are “also pricing in a very high margin of safety.'
How cheap are stocks? In Europe, he says, 'Equities yield 5-6% and many are on earnings yields of 20-33%. They are mouth-wateringly attractive.'
Odey is a legend in London — an affable genius who makes his money buying the investments everyone else is too afraid
Here is the link to the full article:
http://www.marketwatch.com/story/buy-europe-one-investors-gutsy-call-2011-09-26?dist=beforebell
I’m not sure at this point if buying an ETF focused on European shares is the way to go or to selectively pick a few of the best companies. What I am certain of is that it is definitely time to be looking at Europe.
CNBC is extending coverage into the evenings to keep us up to speed with the euro zone and its problems. On the one to ten panic scale I’d say the European situation is pretty close to an eight. With the fall of 2008 post-Lehman Brothers being a ten and any Gulf of Mexico related investment last summer being a seven.
A few years ago Buffett sat down for an afternoon with a S&P manual that listed Korean stocks during that countries financial crisis. He put together a portfolio of Korean stocks (for his personal portfolio) in a couple of hours that provided huge returns in the years following. Buffett ignored the horrible headlines coming out of Asia and instead focused on the ridiculous valuations that were being assigned to Korean equities.
Here is Buffett discussing that investment from a GuruFocus article:
http://www.gurufocus.com/news/4434/permanent-value-the-teachings-of-warren-buffett
A couple of years ago I got this investment guide on Korean stocks. I began looking through it. It felt like 1974 all over again. Look here at this company... Dae Han, I don't know how you pronounce it, it’s a flour company. It earned 12,879 won previously. It currently had a book value of 200,000 won and was earning 18,000 won. It had traded as high as 43,000 and as low as 35,000 won. At the time, the current price was 40,000 or 2 times earnings. In 4 hours I had found 20 companies like this.
The point is nobody is going to tell you about these companies. There are no broker reports on Dae Han Flour Company. When you invest like this, you will make money. Sure 1 or 2 companies may turn out to be poor choices, but the others will more than make up for any losses. Not all of them will be good, but some will and those will make you rich. These opportunities will be there in the next 30 years. You’ll have streaks where you’ll find some bad companies and a few times where you’ll make money with everything that you do.
It takes courage to buy at times like that and a belief that the sun is going to keep coming up every day even though at the time you are buying it may feel like it won’t. Over time things will improve and valuations will be less pessimistic.
With Buffett’s foray into Korea in mind I’m trying to look to opportunities in Europe. It isn’t easy to do as I don’t have any background with European companies so all investment ideas are starting from scratch. I’m looking to buy high quality companies, trading at junk prices.
It is much easier to know the sector before it sells off. That provides more confidence in times of distress as you know the businesses well.
I came across this article which details the thinking of a very successful investor who has been focused on Europe for a long time (successfully) and is wildly bullish on European stocks today:
Europe is bust, buy Europe.
That, at least, is the call from the smartest investor I know — Crispin Odey, a hedge-fund manager in London.
'It may be confusing to find someone who believes that a crisis is on its way but is also happy to buy equities ahead of the crisis,' he writes in his latest bulletin to investors. 'My reason is that the worries have been there for so long, the causes are so obvious and the valuations are so cheap that this is a case of buying early. For me the crisis will bring resolution and with it higher prices.'
(The resolution, he says, is that the banks there will need recapitalizing. It has to happen.)
The 'geopolitical outlook' for the world, Odey admits, 'is unresolvably bad.' However, at these levels investors are 'not only being paid to be patient by high dividend yields,” but shares are “also pricing in a very high margin of safety.'
How cheap are stocks? In Europe, he says, 'Equities yield 5-6% and many are on earnings yields of 20-33%. They are mouth-wateringly attractive.'
Odey is a legend in London — an affable genius who makes his money buying the investments everyone else is too afraid
Here is the link to the full article:
http://www.marketwatch.com/story/buy-europe-one-investors-gutsy-call-2011-09-26?dist=beforebell
I’m not sure at this point if buying an ETF focused on European shares is the way to go or to selectively pick a few of the best companies. What I am certain of is that it is definitely time to be looking at Europe.
