What I Learned This Week

European equity performance is at a 40-year low relative to the U.S. Five reasons to buy European stocks.

U.S. equities have dramatically outperformed European equities since the 2008 Global Financial Crisis, with the MSCI U.S. total return index beating the MSCI Europe index by 105% in dollar terms, according to data cited by CNBC.  However, as the following charts illustrate, the relative outperformance of U.S. stocks is not only near historically-peak levels, but the last three up-cycles in the euro began when the relative outperformance of U.S. equities was at more than one standard deviation above the mean (1971, 1985 and 2001, respectively).  Is the pendulum about to swing back in favor of Europe? As we have argued for several months, the European economy is growing faster than t…

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