Weekly Wrap: Looking to Europe

Sir John Templeton, the late investing legend, made his name by hunting down bargain shares - and he wasn’t afraid to scour the world to find them. Back in 1939, Templeton bought $100 of stock is every company trading below a dollar on American stock markets. With $10,400 invested in 104 companies there were bound to be some losers - and 34 of his stocks did go bust. But even so, he still managed to sell the portfolio for $40,000 just four years later.

Templeton was an advocate of wide diversification and a contrarian thinker who went wherever stocks looked cheap. He famously noted: “If you search worldwide, you will find more and better bargains than by studying only one nation.”

With that in mind it was interesting to see comments this week from another highly regarded investor, Howard Marks, of Oaktree Capital. He was quoted as saying that, like-for-like, Europe offers better potential than the US right now. This was a subject that we picked up in our article on The top 10 European growth stocks to soften sceptics.

Elsewhere this week, our small-cap expert Paul Scott sparked some heated debate over subjects ranging from valuing software companies to investing in foreign stocks. You can catch up with his Small Cap Reports here. Alex Naamani’s Share Comparisons column pitched Tesco against Marks & Spencer. While our Stock in Focus from Roland Head was engineering group Costain.

Around the web this week, we’ve been reading:

• James Montier, GMO - The Idolatry of Interest Rates Part I: Chasing Will-o’-the-Wisp - and Paul Krugman’s response
• Ben Carlson, A Wealth of Common Sense - The Four Pillars of Retirement Savings
• Richard Beddard, Interactive Investor - Spotting value traps before they slam shut
• Nick Kirrage, The Value Perspective - Poll fault – We didn’t know who would win the election but we knew the pundits didn’t either
• Morgan Housel, TMF - The Priceless Art of Not Caring
• Patrick O’Shaughnessy, The Investor’s Field Guide - The Original Value Factor: Price-to-Book
• John Alberg and Michael Seckler, Euclidean Technologies - Why Is Value Investing So Difficult?

Safe Investing!