European Markets as Global Leaders?

European stocks climbed to a five- year high on speculation the Federal Reserve will cut interest rates in the world's largest economy. The European Central Bank probably will today raise its benchmark interest rates to keep inflation in check.

In Technology shares, Infineon, Europe's second-largest chipmaker and SAP, the world's largest maker of business-management software drove the European stocks. In Energy shares, BP, Europe's No. 2 oil company and Royal Dutch Shell Plc shares gained heavily.

Europe’s share of global financial markets rose in the past five years compared with America, a survey by International Financial Services London. Between 2001 and 2005, Europe’s share of global business, relative to the US, grew in all categories.

 

Not really. (1) Europe still has to sell their goods to the US in order to remain profitable. (2) European stocks have probably benfited from foreign buying in order to outperform other markets. (3) Europe has had an increasing percentage of public participation which gets more buying power in their markets. Eat your croissant and sip your cappacheeno.

 

I say to stick with the tired old cliches. "If the US has a headache, then the foreign world has a heart attack"

The United States has the greatest obvious wealth and strongest consumers. The world revolves around the US economy.

How can you have growth in the foreign world without growth in the United States?

I believe that people are setting themselves up for failure with the foreign world thinking that there will be greater growth. As was demonstrated in May, the foreign markets went into a panic with India falling a good percentage. The police were on guard for investor suicides there and there were stories of people getting wiped out. Go ahead and visit a third-world country and tell me what you see. There are indeed a lot of risks here.

I have very little of my capital invested in the foreign markets for this reason. The money that I have invested there is in a few diversified mutual funds that have proven themselves over a period of time. Playing the foreign markets can be very fruitful, but when it does turn you will be reliving the Crash of 1929 in all its splendor.

Sorry guys, Im too old to be worrying about such things. I will let the Indian, Russia, etc. relive the 1929 crashes on their own. Im perfectly comfortable with my investment in the domestic markets....