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Mike Norman: European Vacation
07/11/2003 12:00 am EST
Mike Norman, editor of The Economic Contrarian, monitors media commentary to assess general opinions regarding financial markets. He then takes positions opposite to the consensus. Due to excessive media optimism he is cautious on domestic tech stocks and Japan. Europe, however, is a buy.
"Our Contrarian Indices are based on market commentary in the media. High positive readings mean that there are lots of bullish news stories, headlines, and commentary. Contrarians go short when readings are positive. Negative readings mean that there is a preponderance of bearish headlines, news, and commentary. Usually, that is a good time to go long.
"My Contrarian Index for the Tech Sector registered a
single-day record for bullish commentary in the media yesterday. That is
bearish, at least short term. As a result, I would be locking in some tech
stock profits (yet staying in the market with a core position). In addition,
take some profits in Japan, where the bullish commentary has been blowing
through the roof. I still think the Japanese rally is intact long-term, but I
want to cut my exposure at this juncture now that everyone is turning
"Toinvest in European shares, we suggest using exchange-traded funds (ETFs replicate the performance of a specific index or basket of stocks). We recommend the iShares MSCI France index (EWQ ASE). Politics aside, the French market is highly undervalued. We also recommend the iShares MSCI Germany index (EWG ASE), the iShares MSCI Italy index (EWI ASE), and the iShares MSCI Netherlands index (EWN ASE ). We would also note that one easy way to play these trends is by purchasing iShares Europe (EZU NYSE)."
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