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As the saying goes, you should buy stocks when there's blood in the streets -- when fear makes investments cheap.

There's blood in the streets of Europe – literally in Spain last week. So, dare we invest in European stocks?

They look cheap, relatively speaking. The Euro Stoxx 50 index of big Eurozone companies is trading at 9.3 times this year's expected earnings. By comparison, the S&P 500 Index of big American stocks is trading at 12.4.

Based next year's forecast, European stocks are at 8.4 times earnings compared to 11.8 here at home.

Then again, nobody thinks the U.S. financial system is about to collapse. As for Europe, we're not so sure.

America bailed out its banks three years ago, and U.S. Treasuries are the world's safe haven. Our financial crisis is history. But Europe lurches from spasm to spasm, leaving investors to worry if an investment-eating panic might still break out.

Austerity and angst are dragging the Continent into recession – and dampening the recovery in America.

You can see the result in the market's behavior. American stocks are up 80 percent from their Great Recession bottom in March, 2009. European stocks are up only 13 percent.

Is this a buying opportunity? 

“It's probably a little bit too early,” says Sameer Samana, international strategist at Wells Fargo Advisors in St. Louis. Right now, European stocks aren't cheap enough to compensate for the risk. “If growth continues to slow, if austerity continues to increase, they could end up in a much bigger hole,” he said.

At Edward Jones in Des Peres, market strategist Craig Fehr doesn't trust the earnings forecasts for Europe. What looked to be a mild recession around Europe's troubled edges keeps getting worse, and leaking into Germany and the rich north. That bodes ill for profits.

A 2008-style meltdown is possible but unlikely, says Fehr. The crisis has hit the boiling point several times, he noted, and Europe's leaders always found a temporary way to lower the heat.

“Europe's crisis will bubble on for some time,” says Fehr.

The basic problem is that the euro zone has a single currency, but many governments, and the rich countries are loathe to bail out the poor ones. So, investors worry about the solvency of sick governments and banks.

In America, when one region gets in deep trouble, the federal government automatically helps out, sending money for welfare and unemployment, picking up the tab for bank insolvencies, highway building, school aid and the like. A sick state economy – say Nevada with its housing collapse – doesn't have to support an army or pay Social Security or Medicare.

Europe, with a population a little bigger than the U.S., has no money-bags Uncle Sam. Each country is on its own. That's why countries that are hurting (Spain's unemployment is 25 percent) keep hurting more and more.

There, aid to the suffering nations has been grudging, stingy and slow. Germany, Europe's rich man, benefits from the euro. It's willing to do more for its poor cousins, but only if they surrender much sovereignty over their own spending to the bureaucrats of the European Union.

“For the third time in a century, Germany is trying to run Europe. They'll probably have more success this time,” said Bill O'Grady, chief market strategist at Confluence Investment Management in Webster Groves.

The Germans will likely prevail, Fehr agrees, but it will take a couple of years of haggling. Meanwhile, we'll have to worry about another crash or a dissolution of the euro.

How to play this: Samana recommends a “core/satellite” approach. Divide your foreign stock investments in two pots. Put half in a diversified international mutual fund investing both in developed and emerging markets. For the other half, pick some regions with good prospects over the short haul.

Samana likes Norway, a rich country that doesn't use the euro. It's a natural resources economy, big on oil. Oil prices may rise as the global economy picks up some steam. Wells Fargo Advisors likes Global X Norway (ticker NORW) exchange-traded fund.

Samana would also park some money in Japan for now. It's a slow-growing economy, but it is a better bet than the rest of the world for the next year or so. “It's a port in the storm,” he said. Options include iShares MSCI Japan ETF (ticker EWJ) and MAXIS Nikkei 225 Index ETF (NKY).

Edward Jones recommends a 30 percent allocation to international stocks, spread broadly around the world. Mutual funds are best for that.

O'Grady begs to differ. International stocks used to provide some cushion for the U.S. investor, zigging when American stocks zagged. But these days all markets tend to move in the same direction, a product of globalization, he says. Even the emerging markets have joined the synchronized dance, although they tend to dip lower and jump higher.