Fundamental indexing guru Rob Arnott says that to get bargains, you have to invest in places where fears are high. Right now, he says that means to look in places like emerging markets and Europe.
Looking for places where the risk/reward scenario is most attractive? Top fund manager David Herro says Europe is the place to focus.
While Europe has had more than its fair share of trouble in recent years, Wells Capital’s Jim Paulsen thinks European equities are a good bet right now.
PIMCO’s Bill Gross says that what is needed to fix the European debt crisis is growth and budget discipline — not mere austerity.
“No, that doesn’t work,” Gross says of the austerity approach in an interview with the Associated Press. “Eliminating a budget deficit won’t produce growth. It really requires a delicate combination of growth and budget discipline over the longer term. Policymakers have it tough.”
Gross says that bond investors do look at debt levels, but they also look at growth. And right now, that’s what’s lacking in Europe. “If a country can’t grow its way out of its predicament, we won’t go there. That’s why we’ve stayed out of Europe for the most part,” he says.
For Europe to heal, it needs to lure private investors, and to do that, balance is needed, not a policy of “cut everything”, Gross says. “If the private markets can’t be convinced, this crisis is going to be with us for a very long time,” he adds.
While the chaos surrounding recent elections in Europe is scaring many investors, author and top-performing money manager Kenneth Fisher says it doesn’t change his bullish outlook for stocks for the year.
Fisher tells Reuters that he thinks the European debt situation won’t topple the stock market, and that the fears are overhyped. “We have seen this movie about 15 times, we should be ashamed of ourselves to fall for the same movie three years in a row,” he said. “If this isn’t priced in, I don’t know what is.”
Fisher thinks the shift toward anti-austerity candidates in Europe could actually help markets, if those candidates follow through on promises to deliver measured growth and prevent the European economy from falling further into recession, according to Reuters.
Templeton Asset Management’s Mark Mobius says he is upping his exposure to European stocks, despite the continent’s lingering debt woes.
“The stocks in the European countries have gone down excessively as a result of the bad news emanating from this crisis and we find good investment opportunities at bargain price and we are increasing the purchases of these stocks,” Mobius says, according to Bloomberg.
Mobius adds that “we don’t think the crisis will last forever and the European economies will recover nicely, there will be much more fiscal disciple in one year or two”. He says he’s buying consumer-oriented stocks, and is focusing on eastern Europe.