Something To Ponder
The chart pictured above is the Vanguard MSCI Europe ETF {VGK} it is basically a large cap European stock fund. Its top positions are according to Morningstar Nestle, HSBC, British Petroleum, Vodafone and Novartis. Again according to Morningstar the fund sports about a 4.5% dividend yield at these prices. For the record I'm long this for client accounts and have been wrong as it is lower than where I've purchased it in the past year or so.
Here's something I've been pondering a bit lately. Now everything we've heard out of Europe in the past few years is all gloom and doom. Indeed the news recently has been about as glum from the "Old World" as it could be short of war. VGK took a big hit last year about this time. But since then it has traded basically in the range I've outlined in the chart above. So my question is {to which I don't really have an answer} WHY IS THIS NOT LOWER?
Now maybe the answer is that VGK is populated by companies with a strong global presence and like US companies have been able to manage their way through extraordinary times. Or maybe the answer is that VGK is going lower soon if the EU implodes. It is at the bottom of its trading range and sporting overbought ratings by our analysis so perhaps this past year has been the calm before the storm.
But the fact remains that VGK has had multiple opportunities to trade lower since last summer when it collapsed and each time it's found its footing and rallied. Now look I have no idea where the next 5-10% is in this index and I would not be adding to positions in it right now either. But I'll put it back on the watch list just in case against all hope the folks over the pond get their financial wits together and against all likelihood put something together in the next few months. Events are rapidly getting away from them the longer they dither.
In the meantime there is that 4.5% dividend.
"Just sayin".
*Long VGK in client and personal accounts. Nothing here should be construed as a recommendation to buy any above mentioned security or construed as personal finical advise.
Now maybe the answer is that VGK is populated by companies with a strong global presence and like US companies have been able to manage their way through extraordinary times. Or maybe the answer is that VGK is going lower soon if the EU implodes. It is at the bottom of its trading range and sporting overbought ratings by our analysis so perhaps this past year has been the calm before the storm.
But the fact remains that VGK has had multiple opportunities to trade lower since last summer when it collapsed and each time it's found its footing and rallied. Now look I have no idea where the next 5-10% is in this index and I would not be adding to positions in it right now either. But I'll put it back on the watch list just in case against all hope the folks over the pond get their financial wits together and against all likelihood put something together in the next few months. Events are rapidly getting away from them the longer they dither.
In the meantime there is that 4.5% dividend.
"Just sayin".
*Long VGK in client and personal accounts. Nothing here should be construed as a recommendation to buy any above mentioned security or construed as personal finical advise.
posted by CR English at 8:00 AM
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