It’s been another interesting week of ups and downs in the market, with investors continuing to express trepidation about valuations as many market averages touch all-time highs. I haven’t done anything to my portfolio and haven’t had many big thoughts this week, though we did continue our discussion of Ligand earlier in the week with the short seller pressure continuing to hit LGND shares (I haven’t done anything with my holding yet, absent more news I’m waiting to see more data from Ligand in their next quarterly release, particularly about Promacta sales).

It seems a little crazy that we’re hitting all-time highs in the S&P 500 and the Dow Jones Industrial Average at a time when individual investors are relatively bearish and getting more so, but that’s what’s happening. At least, if you measure sentiment by the AAII survey (latest results here) or by the various fund flows reports that indicate investors have been pulling money out of stock-focused mutual funds recently after adding to them in the first quarter.

But I have come close to making an investment in a broad market index in Europe… so for your Friday File chatter today I’ll go through my thought process on that.

As I was musing on bigger picture things yesterday, when we had the brief and nasty blip in the markets thanks to the weakness of one bank in Portugal, my thinking started crystallizing around the notion that Europe’s economic recovery is still quite a ways behind the United States’ … and that part of the reason for that has been their regulators’ slower and less aggressive reaction to economic weakness following the financial crisis/recession, which helped lead to contagion in sovereign debt and all the other nasty stuff that had everyone worried about Greece and Ireland and Italy and, yes, Portugal, all countries which seemed capable of sending the global economy into a tailspin just a couple years ago.

Europe’s banks have arguably really not yet healed fully, since many of them didn’t move so dramatically to recapitalize and get the worst behind them and write off bad assets, and the weaker countries in Europe are still weak… but I think Europe’s economy writ large is still slowly recovering, and that many of the big European multinationals have pretty decent valuations and might be worth a nibble.

But my sense is also that as the ...