American Readers Don't Want to Hear This

American readers don't want to hear this... A 'Melt Up' in U.S. stocks is coming, but it isn't the only opportunity... Two catalysts that will propel this group of stocks higher... A simple, 'one click' way to profit as this situation unfolds...

I (Chris Igou) expect to catch a lot of heat for today's Digest...

You likely aren't going to like what I have to say. It's not the kind of message an audience of mostly American readers wants to hear.

Heck, my boss Steve Sjuggerud might not be pleased with what I'm going to say, either.

But as you know... at Stansberry Research, we pride ourselves in telling you, our readers, what we'd want to know if our roles were reversed. So that's what I'm going to do...

Sorry, Steve.

I've worked with Steve for three years now...

As regular Digest readers know, Steve's a self-proclaimed generalist. He isn't a geologist, a pharmaceutical guru, or an expert on commodities.

Steve simply excels at spotting the big opportunity first – and then figuring out how to help his subscribers profit from it.

He has worn the "Mr. Melt Up" hat for most of my time at Stansberry Research.

But the truth is, our team isn't just focused on what's happening in the U.S. We're not just focused on the Melt Up.

Our goal is to find the best investment opportunities available, no matter where they're happening around the globe. And after doing that, we want to deliver the best ways to profit from those ideas to our subscribers.

That brings me to the message you won't want to hear. But as you'll see, it makes sense...

Your money is better off outside the U.S. over the next decade.

I'll share why that's true in just a minute. But before I do, I want to be clear about one thing...

My team and I still expect a major Melt Up in U.S. stocks...

As you know, the Melt Up is the last major rally before the eventual "Melt Down."

It's why – even after 10 boom years – we still expect a major surge in U.S. stocks before it ultimately ends.

You see, in the final months leading up to the peak of any bull market, investors go "all in." The buying frenzy leads to a massive rally in a short span.

A classic example is technology stocks in the late 1990s...

In the final year of the dot-com boom, investors went all-in on tech stocks. And the entire sector soared more than 100% in just 15 months.

We still believe we're in the final innings of a Melt Up in U.S. stocks. And when it's all said and done, investors could experience triple-digit gains before the good times end.

Still, the opportunity is much better overseas if we look out five or 10 years.

It's tough for a lot of folks in the U.S. to understand this idea...

It seems un-American to put your money to work outside the U.S. And it's even harder to do something like that when we've seen U.S. stocks go up for 10 straight years.

But right now, a multiyear opportunity is setting up. And it could lead to massive gains outside of the U.S.

More specifically, two catalysts are coming together that will lead one part of the globe in particular to outperform the U.S. over the next decade or so. That's why I believe it's a smart move to shift some money out of the U.S. and into this space today.

I'm talking about European stocks.

The first reason why it's time to invest in Europe is extreme hatred...

This setup doesn't come around often. But when it does, you have to step up to the plate and take advantage of it.

This is exactly what we want to see as contrarian investors. And it's happening now in European stocks...

Every month, Bank of America Merrill Lynch releases its Global Fund Manager Survey. This report tracks the views of approximately 200 institutional, mutual, and hedge-fund managers around the world.

The March survey revealed extreme bearishness in European stocks. As news service Reuters explained...

Fund managers have named bearish bets in European equities as the "most crowded" trade in Bank of America Merrill Lynch's survey for the first time in its history.

Global investors haven't just given up on European stocks. They're betting against European stocks at a level that has never before happened in the history of this survey.

That's important because the crowd is often wrong when making extreme bets...

We saw a clear example of this in the gold market in 2016. Back then, the Commitment of Traders ("COT") report gave us the signal...

The COT report shows the real-money bets of futures traders. And like any group of investors, they tend to get it wrong when they all agree.

In late 2015, futures traders were all betting on lower gold prices. These bets on falling gold prices reached the most extreme level in history. And as you'd probably expect, these folks got killed.

Betting against gold at that time turned out to be a terrible idea. Gold went on to soar nearly 30% in roughly six months. Take a look...

Another example happened with U.S. stocks at the end of last year...

Stocks suffered their worst December since the Great Depression. The benchmark S&P 500 Index fell 9.6% during the month. And stocks lost money on the year as a result. It was the first losing year since 2008.

Investors were giving up in droves. The crowd assumed the bad times would continue... And they began pulling money out of stocks.

According to analysts at data and analytics firm Refinitiv, investors pulled more than $46 billion out of U.S. equity mutual funds and exchange-traded funds in a one-week span in early December. That's the biggest one-week outflow that Refinitiv has ever recorded.

Of course, we know now that things soon turned around...

The S&P 500's fall stopped on December 24. And the best January for U.S. stocks in 30 years followed.

The S&P 500 has rallied roughly 20% from its bottom – including 12% so far this year. And the uptrend is still firmly in place...

Again, I'm telling you this because the crowd is betting against European stocks to an extreme right now. And history says big gains are likely as a result.

The extreme hatred is only one reason to be excited about Europe now, though. There's another – even more important – reason to be excited over the next few years.

European stocks are also dirt-cheap right now...

We can see this in a handful of ways.

Let's start with the price-to-book (P/B) ratio. It's a simple valuation tool that tells you how cheap or expensive a stock is relative to its assets. A high P/B ratio signals stocks are expensive. And a relatively low P/B ratio shows stocks are cheap.

Today, European stocks are trading for a P/B ratio of 1.5. That's dirt-cheap compared to the P/B ratio for U.S. stocks... which trade at a P/B ratio of 3.3 right now.

Said another way, European stocks trade for less than half the price of their U.S. counterparts.

But it isn't just one measure that shows how cheap European stocks are right now...

We can also see today's value opportunity through the price-to-sales (P/S) ratio. It's another easy way to know if you're paying too much for a stock.

Right now, European stocks trade for a P/S ratio of 1.1. That's a 48% discount to the U.S. market, which trades at a P/S ratio of 2.1 today.

European stocks are a great value any way you slice it. And based on history, we can expect them to outperform their U.S. counterparts over the next decade.

We saw a similar situation play out in the early '90s...

Starting in 1990, U.S. stocks crushed European stocks for six out of seven years. That's more than half a decade of outperformance. But at the end of 1996, the story flipped...

European stocks turned out to be the major winner over the next four years, returning more than 200%. And remember, the U.S. saw a fantastic bull market from 1996 to 2000.

It happened again at the start of the 21st century. European stocks underperformed from 2001 through 2004. That's another four years of poor performance. But then, over the next three years, European stocks crushed their U.S. counterparts. Take a look...

European stocks more than doubled the return of the S&P 500 during that span. That's amazing outperformance. And it's what we can hope for again this time...

You see, European stocks have underperformed U.S. stocks in four of the past five years. And history says the story will soon flip on its head.

The current setup in European stocks offers a great opportunity to profit...

Investors are betting on lower European stock prices at extreme levels. They believe these stocks will continue heading lower. And that means the opposite will likely occur. Plus, European stocks are a fantastic value right now compared to U.S. stocks.

That's why – and I know you won't like to hear this – your money is better off outside the U.S. over the next decade.

After years of underperformance, European stocks will likely crush their U.S. counterparts in the years to come. Triple-digit gains are possible as this situation plays out.

One way to take advantage of this opportunity today is through the SPDR EURO STOXX 50 Fund (FEZ). This exchange-traded fund tracks the largest 50 stocks in Europe.

By buying shares of FEZ, you're buying the blue chips of European stocks. It's a simple, one-click way to take advantage of the current opportunity in this space. Check it out.

New 52-week highs (as of 3/28/19): Automatic Data Processing (ADP), Hershey (HSY), Ingersoll Rand (IR), iShares iBoxx Investment Grade Corporate Bond Fund (LQD), McDonald's (MCD), MarketAxess (MKTX), Nuveen Municipal Value Fund (NUV), O'Reilly Automotive (ORLY), Procter & Gamble (PG), and Starbucks (SBUX).

What's on your mind? Do you invest some of your money outside the U.S.? As always, share your thoughts and comments with us at feedback@stansberryresearch.com.

Good investing,

Chris Igou
Jacksonville, Florida
March 29, 2019