Global Valuation Updates!

Quarterly CAPE Ratio Updates!  

Not much change this Q (sounding like a broken record)

Median CAPE Ratio: 17
25% cheapest 12
25% most expensive: 28 (U.S. in this bucket)

Average of Foreign Developed: 21
Average of Foreign Emerging 15

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 4.

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 9.8 11.6 4.4 1.2 3 E -40.52
Russia 7.2 28.9 4.5 0.9 5 E -66.16
Poland 11.1 26 5.1 1.2 6 E -38.66
Turkey 8.2 27.7 6.5 1.1 7 E -52.82
Spain 14.1 19.3 6.3 1.3 8 D -22.21
Portugal 16.1 19.3 4.9 1.2 8 D -54.38
Egypt 13.6 28.1 7.1 1.4 10 E -62.14
Greece -3.1 16.2 2.8 0.3 12 E -96.28
Singapore 13.6 26.4 10.5 1.3 13 D -6.22
Italy 20.1 29.9 5.6 1 13 D -38.23
Norway 15.8 28.7 7.2 1.6 14 D -9.7
Korea 11.9 69.1 6.4 1.1 15 D -20.33
Chile 15.2 32.6 8.6 1.5 15 E -33.55
Austria 16.2 38.7 6.4 1.2 16 D -41.38
Malaysia 14.7 30 9.6 1.6 16 E -11.92
Hong Kong 14.2 34 10.6 1.2 17 D -16.98
U.K. 16.1 28.6 9.1 1.9 17 D -3.67
Colombia 16.1 30.1 10.2 1.4 17 E -23.27
China 12.7 40.6 9.3 1.6 19 E -26.46
Hungary 15.4 58.8 6.4 1.6 20 E -15.03
Israel 15.3 39 10 1.6 21 D -13.97
Germany 17.6 38.4 8.7 1.8 22 D -13.1
Brazil 17.4 32.6 10.4 1.9 23 E -8.55
South Africa 16.8 31.4 11.1 2.1 24 E -19.24
Taiwan 20 32.9 10.4 2 25 E -0.64
Australia 19.9 26.8 13.4 2.2 25 D -0.84
Mexico 17.9 46.8 8.6 2.1 26 E -19.79
Japan 21.5 61.2 9.7 1.5 27 D -13.15
Thailand 17.6 36.8 10.7 2.3 27 E -14.09
France 21.7 38 11 1.8 28 D -0.15
Canada 21.6 38.1 10.9 2 29 D -1.46
Finland 23.2 29.3 12.8 2.3 29 D -46.02
Indonesia 17.2 42.2 11.5 2.7 31 E -14.68
Sweden 21 37.9 14.9 2.6 32 D -2.47
Philippines 18.9 58 12.3 2.4 33 E -36.68
Peru 16.5 48.9 15.8 2.6 33 E -22.96
Belgium 24.7 39.1 13.9 2.2 34 D -6.99
New Zealand 29.3 36.3 15.2 2.9 35 D -3.33
Netherlands 25.5 52.2 15.2 2.5 37 D -0.16
Ireland 49 72.1 16.3 2.1 39 D -31.85
India 22.2 86.7 14.5 3 39 E -23.83
Switzerland 26.1 43 19.2 3.2 39 D -0.24
U.S. 29.2 73.2 17.3 3.8 42 D -1.94
Denmark 31.8 77.9 19.9 4.1 43 D -1.31

SECTORS

US Global
Communication Svcs 18.4 15.6
Discretionary 36.1 18.7
Energy 18.1 31.6
Financials 21.7 12.7
Health Care 31.6 25.2
Industrials 26.4 18.8
IT 39.7 23.3
Materials 27.5 18.7
Staples 24.1 21.1
Utilities 25.9 16.8

Good investing,
Meb Faber
theideafarm.com