Europe: Value among the ruins?

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Investors have been treating European markets as they would treat rattlesnakes—and for good reason. In November, another eruption of the Greek debt crisis pushed the stock markets that are in the eurozone, which is a group of 17 European Union members, down by an average 22.4 percent for the year, according to MSCI, which tracks international markets. The Dow Jones industrial average was up 1.7 percent during the same period.

David Herro, who is manager of Oakmark International Fund, believes that the market is overreacting. He says the chances that Italy will default on its debt repayments are extremely unlikely: The country is on track to have a balanced budget by 2013, and the government has a large pool of salable assets, he says. Oakmark’s largest European holdings are Credit Suisse (NYSE: CS [ADR]; Price: $21.95), which is a Swiss bank, and BNP Paribas (OTCQX: BNPQY [ADR]; Price: $17.14), which is a French bank.

But European troubles shouldn’t be underestimated, says Jeffrey Morrison, who is portfolio manager at MFS Investment Management.

It seems prudent to us to wait until the eurozone finds a more complete fix for its ailing members before you invest there.