European stocks have better valuation

A few days ago, Buffett told CNBC that his company was buying European stocks. He said Europe "is going to be around" and its economic problems present a buying opportunity. Well, if you really want to find some opportunity to put your money into work now, it is not a bad idea to follow Buffett's footprint. The US stocks have relentlessly climbed up for half a year without any meaningful pause, which is very unusual. While I don't know when, the time will come that the rug is suddenly pulled out from underneath. There is no exception. Although from the historical perspective the US stocks are not yet supper expensive, they are quite pricey at a PE of 16 times in average. It would be much better to buy US stocks if they drop 10-15% from the current level. However, the European stocks are much cheaper, trading just 12 times this year's earnings. That's 20% cheaper than the US stocks. Of course, Europe is facing a lot of significant economic problems but as Buffett said, such problems actually bring a buying opportunity, given their stocks are relatively cheaper. Actually in the past year, the European stocks have been doing much better than the US stocks. If you compare the European 50 blue chips included in the index ETF, Euro Stoxx 50 (FEZ), against the S&P 500, FEZ is clearly outperforming S&P 500 (26% vs 22%). This trend will likely continue, barring any disasters occurring in the Europe.