“We have prolonged banks’ access to unlimited liquidity up to the end of 2016,” Mario Draghi, the European Central Bank (ECB) President, said over the weekend.[ad#Google Adsense 336×280-IA]My friend, Mario Draghi, and the ECB have shown us their cards.
They’re following squarely in the U.S.’ footsteps.
They’re going to do everything they can to devalue their currency and inflate asset prices.
Last week, I explained why Draghi is giving us a great opportunity to short the euro.
But we have an even better opportunity in European stocks, right now.
You see, Draghi’s negative interest rate and easy-money policies will have two major side effects…
1. A weaker euro.
2. Significantly higher stock prices in Europe.
Today, we have a simple way to make both of these bets, in a single, simple investment. It’s the absolute BEST way to invest in Europe today. Let me explain…
In the U.S., I’ve said we’re in about the seventh inning of this great Bernanke Asset Bubble. I expect stocks in the U.S. can still go higher… but it’s getting late in the game.
However, in Europe, we are probably closer to the fourth inning of the “Draghi Asset Bubble.” So there’s a lot left to go in the game. The chart below shows what I mean…
As you can see, the U.S. has broken out to new all-time highs in the past year. Yet, European blue chips have been nearly flat since 2005… and remain 32% below their pre-crisis highs.
Because of this, Europe offers a better opportunity than the U.S. right now. Buying Europe today is a lot like buying U.S. stocks two years ago.
Draghi is just entering crisis mode now. He has cut interest rates to negative levels and has said over and over that he’s willing to do just about anything to boost Europe’s economy.
His stimulus efforts should continue pumping up stock prices in Europe AND decreasing the value of the euro in the process.
One simple investment will give us all of the upside of European stocks… but protection from any falls in the euro… the WisdomTree Europe Hedged Equity Fund (HEDJ).
Importantly, HEDJ eliminates our currency risk. So if the euro falls by 10% or 20%, it won’t make a difference to HEDJ. This is a key feature of this fund.
Longtime readers will remember we saw a similar setup in Japan in 2012…
In my True Wealth newsletter, we bought shares of the WisdomTree Japan Hedged Equity Fund (DXJ). DXJ is just like HEDJ, but in Japan. It was the first time I’d bought a fund like this… It worked out fantastically…
Japanese stocks soared nearly 50% five months after we bought, and the yen crashed by nearly 20% in the same time period. We enjoyed all those gains in stocks, and missed out on all those losses in Japan’s currency. The fund worked exactly as advertised.
Today, we expect the same outcome in Europe. We expect…
1. The euro to fall.
2. European stocks to soar.
Shares of HEDJ give us an opportunity to profit from both of these outcomes.
In short, Europe looks a lot like the U.S. did a couple years ago.
It hasn’t broken out to new highs yet. And its central bankers are finally in panic mode, willing to crush the currency. A weaker euro will improve corporate profits, further helping European stock prices.
Our opportunity is great. Don’t miss shares of HEDJ today.