It may be tempting to ditch European stocks. After all, Europe is expected to be one of the slowest-growing areas of the world in the next several years. (Its economy is expected to grow just 1 percent in 2010, compared with 3 percent for that of the United States.)
Moreover, stock markets in that region have become highly correlated with the Standard & Poor’s 500-stock index, thanks to the increasingly interconnected global economy. That means European stocks aren’t likely to zig when domestic stocks zag.
Nevertheless, many market strategists warn that jettisoning stocks from such a big chunk of the world, which represents more than a quarter of global stock market value, would be a big mistake.
For more: Fundamentally - A Farewell to European Stocks? Not So Fast - NYTimes.com
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