Who in their right mind would invest in Spain today?
If you’ve been paying attention lately, you know Spain is in bad shape…
It’s one of Europe’s heavily-indebted “PIIGS” countries. (The PIIGS are Portugal, Italy, Ireland, Greece, and Spain.) Unemployment is off-the-charts high. And Spain is in the midst of a housing bust.
Sounds bad. But the thing is, Spain is getting “less bad.”
[ad#Google Adsense]Investors have become fearful of the other PIIGS, pushing interest rates up to 8% and higher in Portugal, Ireland, and Greece. (They’re over 12% in Greece.) But investors are feeling better about Spain, where interest rates are around 5%. Spain is getting less bad.
Longtime readers know I call this The Secret to 1,000% Gains: You want to buy when things go from Bad to Less Bad.
The thing is, Spain booms, and Spain busts. It does both spectacularly in its stock market. If you can catch one of those booms, you can make hundreds of percent gains in just a few years.
This chart below, from True Wealth Systems, shows Spain’s booms and busts. (Green means we’re in the trade, red means we’re out. Right now, we’re in.)
Our True Wealth Systems computers tell us we could be at the start of another huge move… It’s certainly possible, because Spanish stocks are CHEAP.
The chart here tells the story. Spanish stocks are coming off their lowest-ever valuations based on price-to-earnings ratios…
In 1984, Spanish stocks were cheap, and they soared more than 500%. The next time Spanish stocks got even close to that cheap was 1990… and they boomed 193%.
After peaking in 2008, Spain has busted badly. And unlike the U.S. economy, which has recovered from the worst of it, Spain has struggled. But Spain’s stock market – a good leading indicator of the economy – started rising early this year. A new uptrend is in place.
Longtime readers know I look for three things in an investment: 1) cheap, 2) hated, and 3) at the start of an uptrend.
Spain is the cheapest it’s been since it soared 500%-plus, starting in 1984. Everyone has written Spain off… And yet the uptrend is in place.
Spain itself has a history of massive stock market booms and busts. Many of those booms were good for hundreds of percent gains. And our True Wealth Systems indicator flashed BUY a couple months ago.
The most reliable data for Spain starts in the 1950s. In every decade since, we had multiyear uptrends in Spain that led to triple-digit gains. Right now could be the start of this decade’s triple-digit gain in Spain.
The easiest way to invest in Spain is through the iShares MSCI Spain Index Fund (EWP). Check it out…
Good investing,
— Steve Sjuggerud
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Source: Daily Wealth