This week sees the most critical meetings of the key personnel in the Eurozone since the launch of the physical currency almost 10 years ago. Arguably it is the most important meeting regarding currencies since the collapse of the Bretton Woods system in 1971.

Without over-dramatising, we could be staring into the abyss of the entire collapse of the Eurozone by this time next week. Having canvassed our contacts at European fund managers, asking the question uppermost in our clients’ minds “what happens IF the Eurozone disintegrates”, the response is a helpful and rhetorical “Who knows?”

With that as a background, one would have to be mad to invest in European equities at the moment, right? Well, possibly. Alternatively, you could be looking at a once-in-a-generation buying opportunity.

As the sagely Niels Jensen reports in his excellent “Absolute Return Letter”, the Price/Earnings ratios of the top European companies are at 1982 levels. In the early 80’s no-one wanted to have equities in their portfolio compared with the turn of the Milennium when everyone did, and since 2000 we have been in a structural bear market.

According to Citibanks’ euphoric/panic model, there is a 90% chance that equity prices will be higher in 6 months and a 97% chance that they will be higher in 1 years time.

Jensen states a convincing case, but cautions that almost a quarter of the European Index quoted above consists of Financial companies, and this week could see them trade lower if Ang, Nico et al don’t pull something out to ease market concerns.

Nevertheless, the lesson to be take here seems to be: get ready to increase risk and exposure to European companies. As the wise old ‘hibou’, Charles Gave is fond of saying ‘the French economy isn’t competitive but lots of French companies are’..