Global Valuation Updates!

Quarterly CAPE Ratio Updates!  

Not much change this Q, though some of the cheap have been strong outperformers this year…

Median CAPE Ratio: 18
25% most expensive: 28 (U.S. in this bucket)
25% cheapest 12

Average of Foreign Developed: 21
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 3.

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 10.2 12.2 4.6 1.2 3 E -37.65
Turkey 7.9 26.5 6.2 1.1 5 E -55.14
Russia 7.5 30.7 4.6 0.9 5 E -66.49
Portugal 15.7 19.0 4.7 1.2 7 D -55.15
Poland 12.1 28.4 5.6 1.3 7 E -34.43
Spain 14.0 19.2 6.3 1.3 8 D -22.29
Egypt 13.3 26.9 6.9 1.4 9 E -62.38
Italy 19.1 28.7 5.3 1.0 11 D -40.73
Greece -3.3 14.9 2.6 0.3 12 E -96.35
Singapore 14.2 27.7 11.0 1.4 14 D -3.38
Norway 15.8 28.9 7.2 1.6 14 D -10.92
Chile 15.4 33.2 8.8 1.5 15 E -32.53
Austria 16.4 38.9 6.4 1.1 15 D -41.80
Korea 12.3 72.7 6.7 1.2 16 D -18.70
Colombia 16.1 29.8 10.3 1.4 16 E -24.48
Malaysia 15.7 32.0 10.2 1.7 18 E -7.54
U.K. 16.2 29.1 9.2 1.9 18 D -4.16
Hungary 14.8 57.5 6.3 1.6 18 E -18.29
Brazil 16.8 31.3 10.0 1.8 20 E -12.18
China 13.7 43.3 9.9 1.8 20 E -22.27
Israel 15.5 39.1 10.2 1.7 21 D -13.26
Germany 17.9 38.8 8.8 1.8 21 D -13.03
Hong Kong 16.6 39.6 12.4 1.5 24 D -4.76
Taiwan 20.1 32.8 10.3 2.0 24 E -3.97
Mexico 18.1 47.3 8.7 2.1 25 E -20.27
Australia 20.0 26.7 13.4 2.2 25 D -0.91
South Africa 18.0 33.8 11.9 2.3 26 E -13.92
France 21.4 37.4 10.8 1.8 26 D -1.35
Japan 21.9 61.0 9.6 1.5 26 D -16.08
Canada 21.6 38.0 10.8 2.0 28 D -2.28
Finland 22.9 29.2 12.5 2.3 28 D -46.90
Belgium 23.4 36.5 12.9 2.0 30 D -14.42
Thailand 19.2 40.1 11.6 2.5 30 E -8.18
Indonesia 18.2 44.5 12.2 2.9 32 E -10.18
Sweden 21.1 38.2 15.0 2.6 33 D -3.58
New Zealand 28.8 35.5 14.9 2.8 34 D 0.00
Philippines 20.1 61.3 13.1 2.6 35 E -33.76
Netherlands 25.1 50.6 14.6 2.4 36 D -0.99
Peru 18.5 55.5 17.7 2.9 36 E -14.94
Ireland 48.0 70.8 15.9 2.1 38 D -33.68
Switzerland 26.0 42.7 18.9 3.2 39 D -0.64
India 23.2 91.7 15.2 3.2 40 E -20.70
U.S. 29.7 74.3 17.5 3.8 42 D -0.87
Denmark 32.0 78.8 19.8 4.1 43 D -2.97

SECTORS

S&P 500 US Global
Communication Svcs 17.7 15.6
Discretionary 36.3 18.7
Energy 19 31.6
Financials 21.8 12.7
Health Care 32 25.2
Industrials 26.1 18.8
IT 39.3 23.3
Materials 27.3 18.7
Staples 23.7 21.1
Utilities 25.4 16.8

 

Good investing,
Meb Faber
theideafarm.com