Global Valuation Updates!

Quarterly CAPE Ratio Updates!  

Not a lot of changes this Q.  Let’s go right to the stats!

Median CAPE Ratio: 18
25% most expensive: 27 (U.S. in this bucket)
25% cheapest 12

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 -3 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

CAPE CAPD CAPCF CAPB Average Rank Dev or Emerging Real Drawdown %
Czech Republic 10.3 12.5 4.7 1.3 3 E -35.18
Russia 6.9 30.9 4.3 0.9 5 E -69.72
Spain 13.3 18.7 6.1 1.3 6 D -23.19
Portugal 15.3 19.4 4.8 1.2 6 D -54.18
Poland 12.0 27.5 5.6 1.3 7 E -34.19
Turkey 9.1 30.8 7.0 1.3 8 E -49.90
Italy 17.5 26.7 5.0 1.0 9 D -42.84
Egypt 13.0 25.8 6.9 1.5 9 E -60.92
Brazil 13.3 25.7 8.1 1.5 10 E -29.06
Greece -3.5 8.5 1.7 0.2 12 E -97.09
Singapore 13.6 27.2 10.5 1.4 12 D -8.18
Colombia 16.4 30.3 11.0 1.4 16 E -26.99
U.K. 16.3 30.5 9.4 2.0 16 D -4.19
Hungary 14.0 55.8 6.3 1.6 18 E -22.67
Chile 16.8 37.2 9.7 1.7 18 E -26.79
Austria 18.5 44.2 7.1 1.3 19 D -36.09
Korea 14.3 84.6 7.7 1.4 19 D -11.88
Norway 17.7 33.6 8.1 1.9 19 D -1.09
Hong Kong 15.9 37.6 11.9 1.4 20 D -12.34
China 14.2 44.6 10.1 1.8 20 E -21.25
Malaysia 16.7 34.8 10.9 1.8 20 E -2.56
Israel 16.5 40.2 10.9 1.8 22 D -9.07
Australia 19.0 25.1 12.7 2.1 23 D -1.66
Germany 19.2 41.2 9.4 2.0 24 D -10.33
South Africa 17.5 33.5 11.7 2.3 24 E -15.95
Taiwan 21.5 34.2 10.8 2.1 25 E -1.41
Canada 21.4 38.9 10.7 2.0 25 D -3.53
France 21.6 38.1 10.8 1.9 26 D -2.39
Finland 23.5 31.8 12.9 2.4 29 D -44.08
Indonesia 17.6 42.8 11.8 2.9 30 E -15.48
Mexico 21.5 57.1 10.4 2.5 31 E -8.62
Belgium 24.5 37.8 13.2 2.1 31 D -13.35
Philippines 18.7 55.3 12.1 2.4 31 E -40.54
New Zealand 26.4 32.5 13.6 2.6 32 D -0.89
Thailand 20.4 42.5 12.4 2.7 32 E -6.67
Japan 27.5 74.4 11.4 1.8 32 D -3.77
Sweden 22.3 40.9 15.7 2.8 34 D -1.10
Netherlands 24.2 48.5 14.0 2.4 35 D -5.90
Peru 18.6 54.9 17.9 3.0 36 E -17.25
Switzerland 25.3 41.5 17.9 3.0 37 D -3.79
Ireland 43.0 69.2 16.5 2.2 38 D -32.05
India 22.5 92.2 15.0 3.2 40 E -22.05
U.S. 31.8 79.3 18.3 4.0 42 D -0.62
Denmark 33.6 85.8 20.2 4.1 43 D -5.47

SECTORS

S&P 500 Current P/E
Energy 21.6
Materials 32.4
Industrials 24.9
Discretionary 36.7
Staples 21.1
Health Care 29.8
Financials 24.7
IT 35.2
Telecom 16.7
Utilities 22.4

Good investing,
Meb Faber
theideafarm.com