TSI #32: European stocks just had an epic quarter

Hello Stoic Investors,

Today I want to show you why European stocks are so different. 

If you are an investor, you have probably heard the term “international diversification”. 

In case the US markets do terribly, your portfolio can be lifted by other economic areas. Such as Europe.

Stocks in the Eurozone just had the best quarter since 1999. How do I know that?

Because the MSCI Euro Index jumped 25.7%.

Is this reason enough to finally consider European stocks?

Maybe.

But first, you need to know the important differences between US and EU stocks.

Let’s dive in.

Key differences

Market Structure: European stock markets are generally more fragmented and less centralized than the U.S. stock market, with multiple exchanges and less liquidity. This means your will probably have to pay higher fees from the spread.

Company ownership: Many European companies are still controlled by founding families or governments, whereas in the US, the companies tend to be more widely held. As a result, retail investors have less control.

Corporate governance: European companies tend to have more complex corporate governance structures, with multiple layers of board representation and more involvement of labor representatives. Consequently, it’s harder for a company to focus on profits alone, which often results in slower share price growth.

Disclosure requirements: European companies have less stringent disclosure requirements than U.S. companies. This doesn’t directly impact the performance of the stock but it’s an interesting fact.

Taxation: Taxation of dividends and capital gains can vary greatly between European countries and the US. You may have to pay higher taxes when investing in Europe.

Trading hours: European stock markets are open during European business hours, while US stock markets are open during US business hours. If you’re from the US, and want to make day trades, you’ll probably have to be active in the middle of the night.

Economic conditions: Europe's economy is generally considered more stable than the US economy, but it also tends to grow more slowly. The US economy is more dynamic and tends to experience higher levels of growth and inflation. Therefore, US stocks therefore rise and fall faster.

It's important to note that these are general characteristics, and the conditions and regulations can vary among countries.

One more thing.

Before you leave I have one more interesting fact for you.

If you love dividends, you should know that US companies generally pay them every quarter.

Well…

European companies prefer annual payouts.

Do not get scared when you do not see that dividend payment in your account.

So, note down these points and start investing today: 

-European stocks just had a fantastic quarter

-US stocks are different than European stocks 

-European stocks pay their dividends annually