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Background: ON July 26, Seeking Alpha published an article I wrote titled Why My Money Went To Spain Today. At that time, the iShares MSCI Spain Capped ETF (EWP), on which I focused, traded around $31. It has surged 20% in these three months, closing Monday at $37.69. I followed that up with The Long Case To Buy Old Europe ETFs on August 6. This expanded the list of ETFs I liked to those of Italy, France and even Greece, as well as the U.K. The ETFs named were the iShares MSCI Italy Capped ETF (EWI), iShares MSCI France ETF (EWQ), and even the Global X FTSE 20 Greece ETF (GREK). All of these have done well to very well.

In contrast, in order to focus on the revival of British economic activity, I stated that I was not investing in the large cap British fund iShares MSCI United Kingdom Index (EWU), but rather in the FirstTrust United Kingdom AlphaDEX (FKU), to which I subsequently mentioned the small cap "twin" to EWU, namely iShares MSCI United Kingdom Small-Cap .

I now want to discuss why my trading opinion has changed on the continental ETFs but not on Britain.

Discussion: In late July and in August, the idea of investing in Spain was met with a good deal of skepticism. Two of the comments the first of the above two articles received were:

A good rule of thumb is to never invest wealth precious to you in any country that borders the Mediterranean Sea.

And

Your money went to Spain today ...... I hope you kissed it good bye on the way out the door.

In any case, here are the most recent three linked articles Yahoo! Finance shows currently for EWP:

3 European ETFs Leading the Recovery (Zacks), The Bull Market No One Is Talking About (Minyanville), and Spain exits its recession: Expect a reaction from Spanish stocks (Market Realist).

Hmmm...

Meanwhile, the average P/E for EWP is now listed as 14. Heck, I can find great U.S. companies for P/E's of 12 or less all over the place. Who needs to put new money into EWP right now, 20% higher than 3 months ago, when Yahoo! Finance is full of bullish articles and EWP is trading 20% above its 200 day exponential moving average?

EWI is at a 15X P/E, and is dominated by a large oil company. EWQ is at 14.2X earnings, and is influenced by the low P/E oil giant Total (TOT). So all these bargains in my mind of the summer look fully-priced now, as well as fully-publicized.

Similar thoughts though different numbers relate to Italy, France and Greece.

Time will tell whether my timing is correct and additionally whether longer-term uptrends are underway in the stock markets of these countries. Perhaps there will be a pause

Britain is a different case, however. The good news is that GDP was estimated to have grown 0.8% quarter on quarter in Q3. The Bank of England is reported to have abandoned any current plans for quantitative easing, and rumors suggest that it may be preparing to raise its base rate from its all-time low of 0.5%. (Note the BoE was founded in 1694.)

FKU trades with a P/E of 14.4, similar to that of EWP, but P/E for P/E, I'll take Britain over Spain hands down. EWUS, which is more of a small cap fund than is FKU, trades at a P/E of 15, far below that of our Russell 2000 ETF (IWM). I'll take EWUS over IWM on that basis alone, especially given at least equivalent or greater economic momentum in the U.K. now versus the U.S. EWUS still trades at slightly less than 1X sales per share, much less than the U.S. markets as a whole, which are said to be at a record 1.6X.

Both FKU and EWUS are somewhat extended and trade very infrequently in the U.S. markets. If you are interested in these funds, please exercise caution; FKU trades better in London, though still lightly. You may have to pay the "asked" price to buy these funds, which I view as acceptable given a multi-year horizon for them, but market orders could be perilous (I have never tried one).

I should end this by saying that I am long a small amount of Banco Santander,S.A. (SAN). This is the largest Spanish bank, but the great majority of its profits emanate from the E.U. and Latin America. I am also long the large British bank Lloyds Banking Group plc (LYG) as well as TOT, which I may take profits on heading into earnings Wednesday. However, overall I'm not comfortable investing in Europe in individual stocks, and my general comments above refer to the ETFs discussed rather than individual names that readers may know well and like.

Summary: The problems in "Club Med" economies have not magically disappeared, but their stock markets have appreciated mightily mostly by P/E expansion since mid-summer. I have therefore largely exited their ETFs to see what happens next.

On the other hand, I'm liking what I see in the U.K., which has seen substantial population growth from Eastern Europe and else where over the past decade or two, and where the central bank appears to be finally normalizing policy. Thus I remain long Britain.

Source: "Un-Liking" Several European ETFs As The Internet Now Publicizes Them

Additional disclosure: Not investment advice. I am not an investment adviser.