What's the most hated market in the world today?
It's not China, despite fears of a trade war.
It's not the U.S. either, despite fears of when the end will come for this near-decadelong bull market.
Heck, it's not even Turkey or Venezuela – two countries in the middle of serious financial crises.
The answer, based on one measure, will likely surprise you. Investors have given up on a vitally important part of the globe. And that's setting up a big opportunity.
Let me explain...
If you want to know what investors think, follow the money.
If folks like an asset or market, they buy it. If they're scared of it, they sell it.
Based on that simple idea, the most hated market in the world right now is Europe...
Investors have been pulling money out of European stocks for the past year. And the worst hit, not surprisingly, has been Germany.
Germany is especially important to watch. It's the lifeblood of the European economy... So when investors worry about Europe, they're likely to pull money out of German stocks.
That's exactly what they've done. Germany saw the largest net outflows from exchange-traded funds (ETFs) in the world over the past year, according to Bloomberg. That means investors are getting out... and fast.
Germany is a proxy for all of Europe. But in this case, investors aren't just selling German stocks... They're selling Europe as a whole.
The simplest way to see this is through shares outstanding for the iShares MSCI Eurozone Fund (EZU). The fund holds stocks from France, Germany, Spain, Italy, and other European countries.
Its total share count has fallen sharply this year... down 34% in roughly eight months. Take a look...
A falling share count means investors are pulling money out of European stocks. They're scared. They want out... And they're selling.
This negative sentiment is exactly what I look for when searching the globe for investments. But negative sentiment alone doesn't tell us when to buy.
Hated stocks and investments can stay hated for months... potentially even years.
So we've found an easy way to get around that problem – one that shows us exactly when to buy.
This won't surprise longtime readers... We wait for the uptrend to return.
Right now, Europe stocks are moving lower. EZU is down roughly 12% from its January peak. For a safe entry point, we want to see prices reverse. When that happens, the gains could be large.
You see, massively negative sentiment isn't a buy signal on its own. But it does tell us we could see a big move higher when prices reverse. It shows that the rubber band is stretched and should bounce back dramatically.
Europe is the most hated market in the world right now. Our buy signal isn't flashing yet. But we'll likely see a big rally in European stocks, once prices and sentiment reverse.
Good investing,
Steve
Further Reading
"Gold is HATED!" Steve writes. Find out more about the situation in gold and precious metals today – and why waiting for the uptrend is so important – right here: Contrarians, Take Note: Gold Hits 'New Milestones of Misery.'
"Buying something just because it's down does not necessarily pay off," Dr. David Eifrig explains. That's why successful contrarian investors keep a few key tenets in mind. Read more here: These Three Steps Will Give You the Courage to Be Contrarian.
Like European stocks, nobody wants to own this investment today... except for us. It's a simple way to bet against the crowd while earning a 5.2% yield...
ONE MORE STEP TOWARD A 'CASHLESS SOCIETY'
Today, we're checking in on one of our favorite technological trends...
Regular readers know shoppers are ditching cash and switching to mobile payments. This trend is already the norm in many parts of the world – and it's catching on in America. Last year, "proximity" mobile payments in the U.S. totaled more than $49 billion, up 78% from 2016. Today's company provides the software that makes this shift possible...
Global Payments (GPN) is a leading provider of digital-payments software. With its help, merchants can securely accept credit and debit cards. Today, Global Payments processes payments at more than 1 million merchant locations across the world, handling more than 6 billion transactions every year. Its strong client base is great for profits... In the most recent quarter, Global Payments reported net income of nearly $118 million, up about 63% from the same quarter last year.
As you can see in the chart below, GPN shares are in a long-term uptrend. Shares are up more than 60% over the past two years, and they recently hit an all-time high. As mobile payments enter the mainstream, expect this stock to keep moving higher...
