Paul Temperton runs The Independent Economic Research Company ( TIER ) and is spokesman for the European Commission on issues relating to the euro. He has previously worked as an economist for the Bank of England. Former roles also include being a director of Merrill Lynch's European Economic and Fixed Income Research Department.
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The trend is your friend.
Economists, such as me, are not supposed to believe in such a rule: markets are supposed to be efficient and stock prices and currencies are supposed to be an unpredictable, random walk. But time and again that has not worked in the currency, stock and bond markets.
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Big is best.
Consolidation will be the big theme in the coming years . Companies that have served local, fragmented markets will merge to become more efficient and take advantage of the larger pan-European euro-denominated market.
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The Americans will shake Europe up.
The catalyst for that consolidation in the euro area will be American companies. American investment banks already dominate the financial markets across Europe. The same will happen in other industrial sectors.
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Value investing will provide the best rewards.
The environment is one in which many companies offer good value on straightforward valuation criteria. Mr. Buffett openly admits he has yet to discover Europe. There are plenty of opportunities.
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Technology- related growth stocks will still be a great area for long- term investors.
Nokia is Europe's pre-eminent technology company. Despite its recent setback the company will be the leader in the mobile telecommunications industry on a five to ten year view.
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Privatization will continue and the rewards from investing should be good.
Privatization has made a great impact in the UK. The impact is only starting to be felt in much of the euro area. As inefficient state enterprises are moved to the private sector look for efficiency gains to generate attractive returns to stockholders .
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The euro will be a success and will last.
Despite widespread skepticism, the euro will be a success and will last. It will bring widespread benefits, in the form of lower transactions costs and greater efficiency, for millions of consumers and companies across the euro area.
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Don't bet on the UK joining the euro soon.
Whether or not the UK will join the euro will be in the balance for the next year or so. Prime Minister Blair clearly wants the UK to join. But a referendum is promised and there is no way that a convincing 'yes' vote in such a referendum seems achievable.
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Don't understimate political determination.
However, politicians in Europe can be pretty insistent on getting their own way. Remember how France and Germany resurrected the idea of the single currency shortly after the 1992-1993 currency crises and eventually forced it through? If Blair really is determined for the UK to join he may find a way of getting the UK 'in' despite the referendum.
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Europe's decade .
In terms of economic and stockmarket performance, Japan was the star of the eighties; America was the star of the nineties. We might just now be entering Europe's decade.
