Global Valuation Updates!

Quarterly CAPE Ratio Updates!  

Lots of carnage in 2018…how did that affect valuations?  Let’s go right to the stats!

Median CAPE Ratio: 16 (19 a year ago)
25% most expensive: 25 (27 a year ago, U.S. in this bucket)
25% cheapest 11 (13 a year ago)

Average of Foreign Developed: 19 (22 a year ago)
Average of Foreign Emerging 15 (17 a year ago)

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, particularly in Asia…

Here it is in Excel too.

MSCI Investable Market Indices

CAPE CAPD CAPCF CAPB Average Rank Dev or Emerging Real Drawdown %
Czech Republic 9.6 11.6 4.4 1.2 4 E -40.28
Russia 6.4 28 4 0.8 5 E -71.58
Portugal 14 17.4 4.3 1.1 5 D -59.46
Spain 12.5 17.3 5.7 1.2 6 D -29.06
Turkey 7.8 26.4 6.1 1.1 7 E -56.93
Egypt 11.6 22.9 6.1 1.3 8 E -66.07
Poland 12 27.5 5.5 1.3 9 E -35.23
Italy 15.9 24.4 4.5 0.9 9 D -49.51
Greece -2.8 8.2 1.6 0.2 12 E -97.46
Colombia 14.1 26.2 9.4 1.2 13 E -36.13
Singapore 12.8 25.3 9.9 1.3 14 D -13.98
Austria 15.2 36.2 5.8 1.1 15 D -47.71
Norway 15.1 28.1 6.9 1.6 15 D -16.75
Brazil 14.8 28.1 8.9 1.6 16 E -21.89
U.K. 14.6 26.9 8.3 1.8 16 D -14.66
Korea 12.2 72.5 6.6 1.2 17 D -22.67
China 12.6 39.5 9 1.6 19 E -30.11
Germany 16.3 35.1 8 1.7 21 D -23.59
Israel 14.5 35.5 9.5 1.6 21 D -19.34
Chile 16.1 35.4 9.3 1.6 22 E -30.1
Hungary 15 59.4 6.7 1.7 22 E -17.96
France 18.6 32.7 9.3 1.6 22 D -16.16
Malaysia 15.4 31.8 10.1 1.7 22 E -10.29
Hong Kong 15.1 35.8 11.3 1.3 23 D -16.09
Australia 17.3 22.9 11.5 1.9 23 D -10.03
Taiwan 18.7 30 9.5 1.9 25 E -13.35
Canada 19.1 34.4 9.5 1.8 27 D -13.71
South Africa 16.9 32.1 11.2 2.2 27 E -19.29
Belgium 20.7 32.2 11.1 1.7 27 D -26.94
Mexico 18.1 47.4 8.7 2.1 28 E -22.99
Finland 20.9 27.6 11.4 2.1 28 D -51.59
Japan 22.3 60.6 9.4 1.5 28 D -20.4
Thailand 18 37.6 11 2.3 30 E -16.58
Sweden 18.8 34.5 13.3 2.3 33 D -15.51
New Zealand 24.7 30.4 12.7 2.4 33 D -7
Indonesia 18.1 44.1 12.2 2.9 34 E -12.71
Netherlands 21.9 43.6 12.5 2.1 35 D -15.68
Philippines 18.8 56.3 12.2 2.4 35 E -39.58
Peru 17.9 53.6 17.2 2.9 36 E -20.2
Switzerland 22.8 37.3 16.2 2.7 38 D -12.54
Ireland 39.4 61 14.1 1.9 38 D -42.25
India 22.4 90.6 14.9 3.2 41 E -22.65
U.S. 26.7 66.6 15.4 3.3 42 D -14.95
Denmark 29.8 75.1 18 3.7 43 D -14.77

SECTORS

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

Good investing,
Meb Faber
theideafarm.com