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If Europe goes into an extended slide; would you add to European smid cap or large cap here?
I don't know, I just think it's best to be globally diversified. I do have a specific investment in Japan not from a fundamental standpoint but because they are going to print themselves into oblivion. Europe is a mess and I think what bothers me is that it's crap swept under the carpet that keeps popping up and then getting swept back under the carpet again. It's "Groundhog Day" finance, problems that just keep repeating because the core issues are never really fixed in the first place, just papered over. I have European exposure via various things, I don't know if I'd add - I just think trying to time it is problematic and I just don't believe the problems are going to be truly fixed. You add to something and everything seems fine for 6-9mo and then something else (whether it be Greece, or Cyprus, or Italy, or whatever) comes up yet again. Every effort is devoted to making things look good in the short-term, it's not about creating anything sustainable.
Reply to @scott: I've never thought of Europe as an investment option per se, but have used broad based foreign mutual funds for the exposure as you recommend .A good manager can make the macro and country specific decisions for me.Plenty of country ,region,or cap specific options available in the ETF space.I own both the Norwegian ETFs for their exposure to oil and oil service and because I'm Norvegian! Like going to the race track and betting on the bright blue silks I suppose.Anyways,there is an investment in Sweden that appeals to me but have been unable to buy it on-line because of an unrecognizable stock symbol.Brings to mind a northern European Berkshire. http://www.latour.se/en/holdings/portfolio
Looking at the funds I own, it seems SFGIX owns the most in Europe, and of that, it's mostly or exclusively in Poland---not western "developed" Europe. I am trusting Andrew Foster with it. No one has disagreed with me here, but the silence is a pregnant response to my assertion that Europe is going to need a couple of generations to get their shit back together. Of the countries that went up in flames, Ireland has been most willing to take its sour medicine and live with austerity. Things are improving there, but I dare say it's not much better for the rank-and-file. the "improvements" are statistical. I'd say if yer gonna own Europe in a fund, use TBGVX. It owns the Big Dawgs on that continent which will survive the '08 Crash and ongoing fallout.
Basically in agreement with Scott and TSP. Aside from the funds I already own which may have a presence in Europe I wouldn't touch the space until signs of a definite rebound or at least stabilization are on display. My hands are still recovering from my last encounter with falling knives.
At low enough values I would like to invest in funds that has attractive valuations and hold companies that has durable business. When the prices are low there is more upside even if it looks terrible. That is when you make money.
I mean, not just "OMG, look at Cyprus"; but "OMG, it was Cyprus, now Spain", and "what's going on in Greece now" and "hey, wait a minute, Italy's books look funny" and we get a decent 10%+ slide.
My portfolio is of value funds (I personally adhere more to a value philosophy than a growth philosophy); so I guess the issue is would you buy smid caps to leverage the volatility/beta vs. large caps, and/or would you (for example) do smid vs. lg caps because per someone like Grantham there is a slight bit more upside in international smid cap vs. lg cap.
In the near term, Europe will likely be volatile now that EU will take a much harsher approach with Sprain and Italy for the bailout using Cyprus as the blueprint. If Europe continues to slide, valuation will become attractive again. Last summer at the height of Euro crisis, I took a position on Europe ETF, VTK, and sold it a month ago for a modest gain. Opportunities will come again when the fear strikes. For now emerging market is more attractive since many countries are in better financial situation than the Europe, especially southern region. Some argue that Euro will split into two tier currency... what a messy social experiment.
Comments
http://www.latour.se/en/holdings/portfolio
At low enough values I would like to invest in funds that has attractive valuations and hold companies that has durable business. When the prices are low there is more upside even if it looks terrible. That is when you make money.
My portfolio is of value funds (I personally adhere more to a value philosophy than a growth philosophy); so I guess the issue is would you buy smid caps to leverage the volatility/beta vs. large caps, and/or would you (for example) do smid vs. lg caps because per someone like Grantham there is a slight bit more upside in international smid cap vs. lg cap.