Well, you’ve got to hand it to the Oracle of Omaha - the man told us that US stocks were getting expensive, while dubious about the growth of alternatives abroad. That right there is as good a trading philosophy as any: Arguably the world’s most successful investor likes a bargain. Let’s be honest, the man is cheap as hell.
So while US stocks have taken a beating - losing all the gains from November’s Trump bump (a Trump dump, perhaps?) - and the S&P500 is sitting at a six-month low. Albeit from an astronomical high. Warren Buffett has moved out of a lot of big stock positions and is sitting in a money-fort of about $300bn worth of T-bills and cash. Well played, Sir, well played.
For the rest of us mortals, this raises the question: Where to put your dosh? Europe’s Stoxx600 index is up 12%, and Germany’s DAX and Hong Kong’s Heng Sang are both up 19%. Nice growth and the P/E ratios aren’t so stretched.
With all the tariff noise coming out of Washington along with other lightly rippling economic red flags, it’s hard to tell if this is simply turbulence, or are we about to make a hard landing. The Chinese stocks on the Heng Sang are roaring for the moment, but Chinese stocks are in the midst of some irrational exuberance over their Sputnik moment with AI start-up DeepSeek. In the long run, including most of this Asian Tiger century, Chinese stocks have proven a serial disappointment to investors. So, maybe not.
There is a stronger case for European stocks, even if they are a longer shot for ROI. The defense and aerospace sectors are on a tear with the realization that most of Europe is either going to have to rearm like it’s 1939, or develop a taste for borsht, fatalism and heroin. Still, relatively speaking, those sectors have been a small part of the European economy, and yet they are bound to grow as the United States steps at least partially back from being Europe’s policeman.
There is a decent chance that the post-America vacuum, should the unthinkable nuking of the continent remain so, will spur more than mere defense spending to knock Germany out of its recession and teh rest of the bloc out of the doldrums. Back in 2008, Friedrich Merz, former corporate lawyer and soon-to-be German chancellor, wrote a book called Dare for More Capitalism so that brainy bald head of his is in the right place. Both he and French President Macron think that Europe is over regulated and are in a gloom about it. The rest of Europe thinks he’s a swell guy too.
Can Europe rise to the occasion and meet their higher purpose of making random Americans more money? Well, they are always saying that they will, but this time they may actually have to do it.
It’s amazing what a little motivation can do.
