If you want to know what investors think, watch what they do with their money.
Sure, folks might say they're bullish or bearish if you ask them... But you won't know for sure until you see the money move.
It's the best way get a real sense of what folks think about an investment idea. And right now, investors are scared of investing in one part of the world.
We know because of what recently happened with real money. Investors fled... And that's set up a big opportunity.
History says we could see another 20%-plus gain over the next year. And we have a simple way to take advantage of it.
Let me explain...
Investor fear has jumped borders.
The February correction was a shock to investors around the globe. And that fear crept into the U.K. stock market in recent months.
Investors rushed out of U.K. stocks in March.
On March 7, shares outstanding of the largest U.K. exchange-traded fund ("ETF") – the iShares MSCI United Kingdom Fund (EWU) – fell 13.9%.
This was an absolutely massive one-day decline. You can see it in the chart below...
This major fall tells us what folks think about investing in the U.K. More than that, it tells us what they're actually doing with their money...
Remember, funds like EWU create and liquidate shares based on demand. So a falling share count means investors are selling U.K. stocks. In this case, they've fled.
This is what I want to see as a contrarian. And it has set up a rare but powerful opportunity.
There have only been a few similar shares-outstanding collapses for EWU since 1996. And in each case, buying after those falls led to fantastic gains over the next year. Take a look...
These are BIG numbers. Especially in a market like the U.K., which hasn't moved much over the past two decades.
Shares of EWU went on to jump 12% six months after similar occurrences... and an incredible 29% over the course of the year.
Those are stellar returns. And consistent, too. We've only seen four other instances of falls like this since 1996... And all four cases led to 20%-plus returns a year later.
Of course, four opportunities in 20-plus years means our sample size is small. But the data behind those few examples is impressive.
This is already playing out today. EWU had its shares outstanding crash in early March. The fund is up more than 5% since then... And it has kicked into a nice uptrend. But the upside is still significant.
History points to 29% upside a year after similar peaks in investor fear. That means EWU has a good chance of rallying 20%-plus from here.
Investors have told us – with their money – what they think of investing in the U.K. It has set up a major opportunity. And EWU is the simple way to take advantage of it.
Good investing,
Brett Eversole
Further Reading
Steve recently wrote about the investing opportunity in another part of the world. This contrarian bet has huge upside potential over the next couple of years... Read more here.
"Fund managers are worried about a market top," Steve writes. This fear could be a good sign for U.S. stocks. With the big money still on the sidelines, share prices have plenty of room to soar... Learn more here.
The U.K. isn't the only hated market with solid upside opportunity. You see, most investments around the world have soared since the 2008 global financial crisis. But you can actually buy one market near 1996 prices. With 20 years of little upward price movement, it's easy to see why investors haven't been excited about it. But that's exactly why this market could soar from here...
HIGHS AND LOWS
NEW HIGHS OF NOTE LAST WEEK
Apple (AAPL)... consumer electronics
Microsoft (MSFT)... "digital utility"
Electronic Arts (EA)... video games
Nvidia (NVDA)... technology "picks and shovels"
Cisco (CSCO)... Internet "plumbing"
Citrix Systems (CTXS)... cloud computing
Adobe Systems (ADBE)... software
Salesforce.com (CRM)... software for businesses
Etsy (ETSY)... online marketplace
Shutterfly (SFLY)... digital photos and prints
E-Trade Financial (ETFC)... online brokerage
Interactive Brokers (IBKR)... online brokerage
Charles Schwab (SCHW)... financial services
Mastercard (MA)... credit cards
Visa (V)... credit cards
Automatic Data Processing (ADP)... human resources
Ferrari (RACE)... "status symbol"
Planet Fitness (PLNT)... America's fitness boom
Extra Space Storage (EXR)... America's self-storage boom
World Wrestling Entertainment (WWE)... "cord cutting" winner
Sysco (SYY)... food products
Cintas (CTAS)... uniforms and supplies
BP (BP)... oil and gas
ConocoPhillips (COP)... oil and gas
Hess (HES)... oil and gas
Noble Energy (NBL)... oil and gas
Transocean (RIG)... "bad to less bad" rally in offshore oil
CSX (CSX)... railroads
NEW LOWS OF NOTE LAST WEEK
Comcast (CMCSA)... "cord cutting" victim
Dish Network (DISH)... "cord cutting" victim
Anheuser-Busch InBev (BUD)... bee
Papa John's (PZZA)... pizza
Bed Bath & Beyond (BBBY)... home good
Walgreens Boots Alliance (WBA)... drugstore
Prestige Brands (PBH)... health
GNC (GNC)... vitamins
