For those investors who bought European stocks when sovereign debt crisis fears periodically spiked, notably early this summer, I commend you. Gains likely range from 20-40%. However, I now suggest looking to take profits at current levels, particularly in Germany.
The iShares MSCI Germany Index exchange-traded fund (EWG) is up 31% off the low in early June and is up 25% in 2012. Under any circumstances, those are respectable gains.
However, the European economy seems likely to remain in recession or have sluggish growth next year, and the rise in share prices seems already to reflect improved prospects for economic growth or an abating of sovereign debt problems.
I still think stock markets will continue to rise over the near term, but I would look to rotate out of big winners into depressed shares that remain or start to build cash for those who are close to fully invested.