The recent correction in U.S stocks may be the first of many, and more serious, declines. Global Income Edge’s answer to bear-proof your portfolio: Invest in select European stocks. We believe European markets are oversold.

 You may not have been scared by the sudden drop earlier this month, after all, it came up short of a formal correction, which is a 10% decline. That’s a far cry from the 20% and 30% correction some economists think is necessary to bring stock prices in line with earnings.

 This raises the question:  Was the swift recovery a “dead cat bounce”? That’s the term for a small, short-lived recovery in a security or market undergoing a deep, long-term decline.

 Why Europe?

So while our cat may have more bounces on its way down, the Europe market cat may have already hit bottom.  In fact, in the last year Europe has been hammered, slammed and crushed by concerns that the region will fall into recession or worse given the risk of deflation in the region, or geopolitical risks, such as Russia and the Ukraine.  

 News of Europe’s decline has been greatly exaggerated, though the market hasn’t realized it yet. Whereas the S&P 500 has risen by more than 70% since October 2008, the onset of the global financial crisis, the Dow Jones Euro Stoxx 50 is still down almost 2% since then. And during the recent October selloff, the S&P 500 has recovered and is up 12% so far this year, where the Dow Jones Euro Stoxx 50 is barely up 1%. 

 We’re not ignoring Europe’s serious problems. The region suffers from slow growth and double digit unemployment in some countries due to lingering effects of the financial crisis. And countries from Germany to Switzerland have revised growth lower as business sentiment is at an all-time low.

 But there are some countries that have recovered and are growing, such as the United Kingdom and Ireland.   And the European Central Bank (ECB) has unveiled plans to bolster companies’ and households’ access to financing, as well as a U.S. Federal Reserve style asset-backed stimulus program that will pump as much as $1.26 trillion into Europe.

 An uptick in consumer spending boosted by ECB stimulus and lower oil prices could improve European company earnings and stock prices.

 And the strengthening of the U.S. dollar will help Europe. European products will become more competitive in the U.S. and around the world, which would also likely drive European corporate earnings and stock prices higher.

 So the opportunity exists to invest in the European market at cut-rate, prices. Remember, this is a region that generates $16.5 trillion, or 23% of global nominal GDP.

 European banker Baron Rothschild of the Rothschild banking family coined the phrase in the 18^th Century that “The time to buy is when there’s blood in the streets.” And the time to buy seems to be upon us.