It often pays to zig when everybody else zags. If you were brave enough to put cash into the stock market three years ago _ and very few small investors were _ you've doubled your money.
European stocks have lost about 15 percent since mid-March. Renewed worries about the region's long-running debt crisis have rattled markets. So it might look like a chance to buy cheap.
The trouble, money managers say, is that nobody knows when the crisis there will end. Most of them predict it will get worse, perhaps far worse, before it gets better.
"You can't pick the bottom," says Martin Jansen, lead manager for international equities at ING Investment Management U.S. "And if things get worse in Europe, today's cheap won't look so cheap anymore."
To hear Jansen and other money managers tell it, a rule for shopping applies for investing: Not everything that goes on sale is a bargain.
If Greece drops out of the 17-country euro currency group this year, as analysts worry it will, it could spread havoc throughout the financial system. And Europe's underlying problems _ slumping economies, deep debt burdens and ever-rising interest rates _ could take years to fix.
That doesn't mean it's time to sell everything connected to Europe. The best approach, fund managers say, is to divide the continent into struggling countries and stronger ones.
Investors who take this approach keep clear of Greek banks but favor German giants. All European markets could get hammered in a panic, but stocks in the stronger countries stand a better chance of bouncing back months, or maybe years, later.
"Put it this way: Are European markets a screaming buy?" Jansen says. "No, right now it's time to be cautious, time to be selective."
Some questions and answers:
Q: Which European countries are in better shape?
Among the 17 countries that use the euro currency, Germany is an outlier. It has the largest economy in Europe and the fourth-largest in the world. But it's not just Germany's size that sets it apart. Key measures of the German economy make it look as if the country broke away from the continent.
Unemployment across the euro countries has hit 10.9 percent, with Spain and Greece above 20 percent. Eight of them are in recession. Borrowing costs for deeply indebted countries hover near what economists consider unsustainable levels. Spain and Italy have to pay slightly less than 6 percent to borrow for 10 years.
By contrast, Germany's unemployment rate is 6.8 percent. Economists expect the economy to expand nearly 1 percent this year. And Germany is a bond-market darling, borrowing for 10 years at just 1.5 percent.
Sean Lynch, Wells Fargo's global investment strategist, says his firm is leery of European stocks, except when it comes to Germany. In money manager-speak, Wells Fargo's stock funds are "underweight" Europe, but "overweight" Germany.
"We need to stop thinking of Europe as one entity," Lynch says. "We like Germany. Countries in the northern part of Europe seem to be on much better footing." He mentions Sweden and Norway, which don't use the euro.
Q: But companies in Germany sell to customers in Portugal, Spain and other shrinking economies. Isn't everyone on the same troubled ship here?
German companies do depend on customers elsewhere in Europe. That's why the next step for bargain-hunters is to find those companies in stable European countries that lean on customers in faster-growing markets across Asia and Africa or even the U.S.
For some money managers, German car makers fit the bill. Volkswagen, for instance, sold a record 8 million cars last year, vaulting to the No. 2 spot worldwide, behind General Motors.
German drivers bought one of every four Volkswagens, but drivers in South America and Asia bought slightly more. Sales to India doubled. And VW stock has a 2.4 percent dividend yield.
RidgeWorth Investments' international equity fund has 14 percent of its money in German stocks, including Volkswagen and Adidas. Chad Deakins, the manager, likes Adidas for its far-reaching customer base. The company sells nearly a quarter of its shoes and clothes to the U.S. and Canada, and another 10 percent each go to Latin America and China.
At the end of March, the RidgeWorth fund held stocks from across Europe but nothing from the hardest-hit countries, Greece, Portugal and Ireland. It had 12 percent of its fund in France and 4 percent in Sweden.
"There's not going to be a quick fix to Europe," Deakins says. "For value investors, it's a game of patience. You buy high-quality companies and wait it out."
Q: So the idea is that you buy and hold till things clear up. When will that be?
Good question. By the looks of it, not anytime soon. Daily news has alternated between reassuring and worrying. Spain nationalized Bankia, one of the country's largest banks. Some cheered the move, while others warned it could burden the government with more debt.
An election last weekend in Greece gave no political party enough votes to form a government, fueling speculation that Greece would miss a debt payment and maybe drop the euro currency. An election in France brought in a president who had pledged to scale back budget-cutting efforts across Europe and push for economic growth.
How long till it's over? An informal poll of five money managers yielded results from "I wouldn't try to guess" to "Who knows?" Jansen of ING says that the crisis could go on for 10 years.
Q: Why should I care? I'm not invested in Europe.
Not so. It's safe to say that if you own a stock fund, you're exposed to Europe. One vehicle of choice for 401(k) investors is the Standard & Poor's 500 index, a collection of large, publicly traded U.S. corporations. S&P estimates that the 500 companies in the index get 14 percent of their revenue from Europe. Overall, nearly half of revenue comes from abroad.
Some well-known U.S. companies lean heavily on Europe, according to data from Howard Silverblatt, S&P's senior index analyst. McDonald's and Kraft Foods get roughly a third of revenue from Europe. For health care behemoths Johnson & Johnson and Pfizer, the region counts for a quarter.
Q: So what's the lesson there? I'm not supposed to sell my S&P fund, right?
That's the bad news about the troubled ship of Europe: We're on it, too.