Mausner: Euro Crisis Presents Buying Opportunities
The withdrawal of Greece from the euro will not happen nor will any other country leave the euro zone.
The consequences even under a "structured" exit are much too big. It is another "too big to fail" scenario because of the domino effect on other countries and because if Greece left, its economy would collapse without huge aid.
If that is the case Greece might as well stay in the euro zone and receive the same aid without the huge disruptive effects of leaving.
The chances of Greece actually exiting are extremely low despite the histrionics in the press. Greece and Spain are really playing a high stakes poker game — trying to extract better terms from the other member countries. Greece knows it won't be allowed to fail or exit.
Emotional sell-offs related to the fears of any country's exit or other euro zone related issues are tremendous buying opportunities for high quality multinational U.S. stocks — they are extremely cheap, their businesses are growing and the entirety of the euro zone, generally speaking, makes up less than 20 percent of U.S. exports.
Most attractive buys in sell-offs would include: Boeing , American Tower , Starbucks , IBM , Qualcomm , Apple , Disney , Costco , eBay , Expedia , United States Natural Gas Fund , Nike , Visa , JPMorgan , Deere , Home Depot , FedEx and biotech ETFs.
The actual economic climate in Europe is much better than the press would have one believe. Yes, from a macro picture there is some contraction going on but that is primarily due to government cutbacks.
Corporations are doing well, restaurants are full, hotels are full, economic activity is resilient. Global stock markets can do just fine with Europe in a shallow recession.
The human element is disastrous as the bottom 10 percent-15 percent in Europe as well as in the U.S. are suffering terribly but from an investing and stock market point of view this is a generational opportunity of staggering proportions.
Valuations have declined resulting in extremely cheap, well capitalized, well refinanced U.S. multinational corporations. Cash flows are good, buy backs and dividends are increasing and both public and private M&A [mergers and acquisitions] is exploding. There are huge opportunities for those not scared off by the headlines and volatility. Yes, there are problems but the risk-reward potential is extremely compelling.
Disclosure: As of June 12th, 2012 Ian Mausner and his family own and are long Boeing, American Tower, Starbucks, IBM, Qualcomm, Apple, Disney, Costco, eBay, Expedia, United States Natural Gas Fund, Nike, Visa, J.P. Morgan, Deere, Home Depot, FedEx and biotech ETFs. Mr. Mausner and J.S. Oliver do not maintain any other relationships with these companies.
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Ian Mausner is a co-founder, Chief Executive Officer and Senior Portfolio Manager for J.S. Oliver Capital Management. Mr. Mausner oversees J.S. Oliver’s investment strategy, allocations and methodology and directs its in-depth research strategies. Prior to founding J.S. Oliver, Mr. Mausner was with Montgomery Securities (now Banc of America Securities), where he was a Managing Director and one of the original members of the Private Client Services Department. Before joining Montgomery Securities, Mr. Mausner worked at Kidder Peabody and Morgan Stanley. He received his BA in Economics from Amherst College and MBA from Stanford Business School.