Barron's: "Buy Europe"

So look what starred over at Barron's this weekend!  Barron's cover story talks about the relative value in Europe versus the US.  It might as well been an article on international investing as a follow on story also covered emerging markets.  Some of what they covered in the article was familiar if you have been reading me.  They did, however, point outs some valuation numbers and fundamental statistics for EAFE {Europe, Australia, Far East} to bolster their argument:

PE {2017 Estimates}:  S&P 500:  18.2      EAFE:  15.3

Price/Cash Flow:         S&P 500:  12.8       EAFE:    9.7

Return on Equity:        S&P 500:  16.2%   EAFE:  10.6%

Dividend Yield:           S&P 500:    2.0%   EAFE:    3.2%

L-T Debt/Capital         S&P 500:  42.5%   EAFE:  34.0%

These numbers are not necessarily cheap on a historical basis but they look better on a relative basis to the US.  These numbers may be low if the rest of the world's growth rate does better than expected consensus.

Finally we discussed last week in our post on "Gundlach and Emerging Markets" on the value in investment and media circles of a well known and influential investor like Jeffrey Gundlach making an investment statement. Gundlach rang the gong on emerging markets but the investment universe seems to have translated what he said to most markets beyond the US.  Calls like his provides cover for the investment class to begin changing direction in a way they may not have been willing to go prior to when he spoke.  It is likely Barron's had this article in the works prior to Gundlach pegged emerging markets, but his call certainly adds heft to what Barrons wrote and probably made it easier for Barron's editors to run the article when they did.  

Note:  The Barron's article may be behind a paywall.

Nothing in this column should be considered investment advice.  Investors should do their own homework and/or discuss all investments discussed in this or any post from our firm with their advisors before making any decisions.  Investors should carefully weigh the risks versus their own unique investment profiles before making any investment decisions.  Better yet, just hire us!  

Also please note that Lumen Capital Management has made investment in certain foreign related ETFs on behalf of its clients and in personal accounts in the past month.  We reserve the right to change these investments without notice on this blog or via any other form of verbal, written or electronic communication.  

Long ETFs related to the S&P 500 and certain foreign ETFs  in both client and personal accounts.  These positions can change at anytime without notice.