The last time the French elected a Socialist president their currency and stock market plunged in a matter of weeks. It turned out to be a bargain.

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Market mavens flapped their hands and reached for their smelling salts after France elected Socialist candidate Francois Hollande president on Sunday. Combined with Greece's elections, which brought fringe candidates into the fold, the news seems to be confirming the worst prejudices about those nutty, left-wing, degenerate Europeans.

How we forget.

In 1981 France elected a president with far deeper left-wing credentials: Francois Mitterand. He brought the Communist party in his coalition. He planned a program of nationalization, higher taxes and more power for trade unions. It was far-left stuff. And there was no euro and France controlled its money supply as well.

In U.S. dollar terms the French stock market quickly plummeted about 30%. And Mitterand's early moves seemed to confirm the panic. He tried to reflate the economy: While the rest of the western world was going through Volcker-style austerity, he nationalized some of France's big companies.

But Francois Mitterand was president of France for 14 years, from 1981 to 1995. Over that period investors in the French stock market made a total profit of 750% -- in U.S. dollar terms. Yes, it was a bull market. But over that period the gross returns on French stocks actually beat those on U.S. stocks by a 20% margin.

The long term picture masks some short-term news. Mitterand's first couple of years were meager for investors. The market went up but the franc went down. Things didn't really take off until the mid-eighties. It helped when France elected a conservative prime minister Jacques Chirac - and policy shifted more to the center.

The situation this time around should reassure investors. Hollande is much more moderate than the 1981 Mitterand. He has far less room to maneuver: The euro, and France's existing national debts, are checks on policy. And for all the fear of socialism, it is worth remembering that the French establishment is a club. According to Bloomberg, Hollande's friends include the chief executives of major French companies including Axa and Vivendi.

Valuations are more important than the news. Right now the French stock market looks cheap and it contains some very tempting looking stocks. Among them is the drug maker Sanofi one of Warren Buffett's picks. It's down to $36, nine times forecast earnings, yielding 3.8%. The stock today is cheaper than when Buffett bought it. Total, the global oil giant based in France, trades for just six times forecast earnings, and has a yield of 5.7%. (Hollande has proposed higher taxes on oil companies).

COMPANY	INDUSTRY	DIVIDEND YIELD (%)
VIVENDI	MEDIA	8.2
CARREFOUR	SUPERMARKETS	7.5
AXA	INSURANCE	7.0
TOTAL	OIL	5.8
SANOFI	DRUGS	3.8

Note: Foreign company dividends are subject to higher tax.

Overall, says FactSet, the French market trades at 10 times forecast earnings much cheaper than the U.S. and has a dividend yield of nearly 4%.

What European stock investors need today, many smart people argue, is looser monetary policy. With Hollande at the Elysee Palace and Mario Draghi running the European Central Bank they may now get it.