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Count to 10 Before Betting on a Europe Rebound

Greece, Portugal, and euro woes may tempt contrarians, but issues abound.

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Greece's financial travails have been making headlines for several months now. Lately the economic woes of Portugal and a few other European nations--most notably Spain--have pushed them into the spotlight as well. Their bonds have fallen in value. The euro is suffering. Stock prices in many European markets are also feeling the pain.

Such overwhelmingly negative news often prompts canny investors to think of ways to benefit. To take the contrarian path. After all, you don't have to be Warren Buffett to know that juicy opportunities can arise when others are running for the exit.

But that doesn't mean you should rush to buy a Europe-stock fund. For one thing, most of the region's stock markets haven't fallen all that far, and the euro isn't even close to its historic low. Further declines are hardly out of the question. Second, even if you've decided the pessimism is overblown and are inclined to jump in, making such a play isn't a simple task. As with any other investment, it makes sense to investigate before buying.

Gregg Wolper does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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