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…
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