FYI: Is this the time to buy foreign stocks? I think so. Here’s why. Sir John Templeton, a pioneer in investing overseas, once said to buy “at the time of maximum pessimism.” Templeton and a host of others, including Warren Buffett, made their fortunes, in part, by going against the crowd.
What’s more, hard numbers back up the case for European and other foreign stocks. Foreign stocks are cheap relative to U.S. stocks—far cheaper than they deserve to be based on the admittedly dismal fundamentals, says the Leuthold Group, a Minneapolis-based investment research firm. Leuthold projects that foreign stocks will return an average of two percentage points per year more than U.S. stocks over the next seven to ten years. Leuthold predicts that U.S. stocks will deliver returns only in mid single digits over that span.