Global Valuation Updates!

Quarterly CAPE Ratio Updates!  

Let’s go right to the stats!

Median CAPE Ratio: 18
25% most expensive: 27 (U.S. in this bucket)
25% cheapest 13

Average of Foreign Developed 22
Average of Foreign Emerging 16

We’ve mentioned this note in every update but bears repeating.  We use the MSCI Investable Market Indices below, but MSCI also calculates their Standard Indices too.  IMI includes more companies and in general is more representative of the entire market.  It really makes no difference for any of the countries except the very smallest ones, such as Greece and Egypt.  For both series the CAPE ratios are almost always near identical, with one glaring exception – again, Greece, which depending on the series you use has a CAPE ratio of -5 or 2.

So, this is one reason we have always used a valuation composite across the variables below.  If one is giving a screwy result, or perhaps a market has a structural bias to one variable, we want to average it out.  So, in this case Greece is cheapest on CAPD, CAPB, and CAPCF, just not on CAPE.

The cheap stuff is still dominated by Europe…but some other names have been creeping in over the past year…

Here it is in Excel too.

MSCI Investable Market Indices

MSCI Investable Market Indices
CAPE CAPD CAPCF CAPB Average Rank Dev or Emerging Real Drawdown %
Czech Republic 9.9 12.2 4.6 1.3 4 E -36.70
Russia 6.4 29.5 4.0 0.8 4 E -72.17
Portugal 15.1 19.4 4.8 1.2 6 D -53.45
Poland 11.2 25.5 5.2 1.2 6 E -38.88
Spain 13.4 19.0 6.2 1.4 6 D -21.46
Brazil 12.3 24.1 7.5 1.4 8 E -33.98
Turkey 9.4 32.1 7.3 1.3 9 E -48.08
Italy 17.7 26.9 5.1 1.0 9 D -40.84
Greece -4.6 8.6 1.8 0.3 12 E -96.65
Singapore 13.4 27.2 10.3 1.4 12 D -9.82
Egypt 15.2 30.5 8.2 1.7 13 E -52.78
Hungary 13.6 54.5 6.2 1.5 16 E -24.26
Norway 16.8 32.4 7.8 1.8 17 D -1.92
U.K. 16.6 31.3 9.7 2.1 17 D -2.77
Israel 15.3 37.1 10.2 1.7 17 D -15.75
Austria 18.4 44.0 7.0 1.3 18 D -36.39
Malaysia 15.7 33.1 10.4 1.7 18 E -8.69
Korea 14.5 85.9 7.8 1.4 19 D -11.70
Chile 17.0 37.7 9.9 1.7 19 E -26.07
Colombia 17.1 31.5 11.7 1.5 19 E -24.87
Hong Kong 16.6 39.2 12.5 1.5 23 D -9.42
Australia 19.0 25.1 12.7 2.1 24 D -0.31
France 21.0 37.3 10.5 1.8 24 D -4.76
Germany 19.4 41.7 9.5 2.0 24 D -9.62
Taiwan 21.3 33.7 10.6 2.1 24 E -4.89
China 15.8 49.4 11.1 2.1 25 E -13.83
Thailand 18.6 38.7 11.3 2.4 27 E -16.38
Finland 22.5 31.0 12.4 2.4 28 D -45.22
South Africa 18.5 35.6 12.4 2.5 28 E -11.39
Canada 22.0 40.1 11.0 2.1 28 D -0.84
Indonesia 16.9 41.2 11.4 2.8 29 E -19.00
Mexico 21.3 57.6 10.4 2.5 31 E -9.00
Philippines 18.9 55.6 12.3 2.5 31 E -40.19
Japan 26.9 72.5 11.1 1.7 32 D -7.96
New Zealand 25.5 31.7 13.2 2.6 32 D -0.90
Belgium 25.2 38.8 13.7 2.1 32 D -9.56
Sweden 21.3 39.4 15.0 2.7 34 D -3.52
Netherlands 24.5 49.6 14.3 2.5 36 D -3.76
Switzerland 24.3 40.2 17.2 2.9 36 D -7.79
Peru 19.1 55.6 18.4 3.2 37 E -14.70
Ireland 42.6 70.9 17.3 2.3 38 D -28.17
India 22.2 92.1 14.9 3.2 39 E -22.91
U.S. 30.2 75.7 17.3 3.8 42 D -5.78
Denmark 33.8 87.5 20.1 4.1 43 D -5.43

SECTORS

S&P 500 Current P/E
Discretionary 36.1
Energy 18.7
Financials 26.9
Health Care 29.5
Industrials 26.2
IT 34
Materials 32
Staples 22.1
Telecom 18.5
Utilities 21.9

Good investing,
Meb Faber
theideafarm.com