DOLLARS AND SEN$E

Be greedy when others are fearful and fearful when others are greedy

BY CHRIS HANLY
Investment Consultant, Gary Goldberg Financial Services

So goes one of my favorite sayings by investment great Warren Buffet. To be sure, as money managers, we (Gary Goldberg Financial Services) have a much more deliberate approach to investing. However, as investor concerns mount over events that are being heavily publicized, but are well known to the investment community, some are getting more fearful. And this brings me unhappily, or depending on your perspective, happily to Europe. Fear is rampant in the streets, along with protesters, and in some cases tear gas.

These are ripe conditions for being deliberately cautious and prudently selective. If you believe, as I do, that Europe will ultimately fix its ills and get back to growth, then it is worthwhile to take a look at some multi-nationals that have underperformed, here and across the pond. European multi-nationals are steeply undervalued at this stage. The shadow of macro and geo-political uncertainties has driven European markets down sharply. All the while earnings estimates have only been brought down minimally for many of Europe’s greatest companies – Unilever (UN), Total SA (TOT), British Petroleum (BP), and Novartis (NVS), to name a few.

Simultaneously, we observed that so far this year, three and a half as many European companies within the STOXX 600 (as compared to last year) beat sales and revenue estimates, while there have been nearly twice as many earnings per share beats than misses.

In fact, dour as the global mood may be, I would not hold off the possibility of a second half rally. Here are the catalysts, of which two have already been realized.

1. Greek elections occur successfully. Check.

2. European leaders become more proactive in dealing with the debt crisis. Check.

3. Second quarter earnings season impresses investors. Check – at least in Europe 4. The Fed unleashes QE 3

5. Bond fund assets begin to move into equities

Should this rally materialize, we expect some of Europe’s strongest and most diversified companies to perform well. Should the rally not materialize, I believe these are stocks that can weather the storm, continue to pay dividends, and someday, over the next two horizons perhaps, reward investors for their patience and confidence. Investing is complex and requires skill. We always advise investors to consult with an investment advisor and to do their homework. If your broker or advisor isn’t talking to you about world events, investment opportunities, and what actions you need to take with your portfolio, then perhaps it’s time for a different perspective.

Christopher Hanly is an investment consultant with Gary Goldberg Financial Services in Suffern and can be reached at (845) 368-2900 ext. 247 or chris.hanly@garygoldberg.com.