Global Valuation Updates!

Quarterly CAPE Ratio Updates!  

Time to review our valuations at the beginning of the new decade!

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

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 6.

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.

CAPE CAPD CAPCF CAPB Average Rank Dev or Emerging Real Drawdown %
Czech Republic 10.3 12.2 4.6 1.2 3 E -38.27
Russia 7.8 30.5 4.8 1 5 E -62.27
Poland 10.9 25.8 5 1.2 5 E -39.18
Turkey 8.5 28.8 6.7 1.2 6 E -50.67
Spain 14.6 19.9 6.6 1.3 8 D -19.73
Portugal 17.3 20.6 5.2 1.3 9 D -51.77
Egypt 13.7 28.9 7.2 1.5 10 E -62.22
Greece -3.1 18.8 3.3 0.4 12 E -95.99
Singapore 14 27.2 10.9 1.4 13 D -1.87
Chile 14 29.8 7.9 1.4 13 E -38.83
Norway 16.2 29.1 7.5 1.7 14 D -6.18
Italy 21 31.4 5.9 1.1 14 D -34.94
Korea 12.7 73 6.9 1.2 15 D -12.78
Austria 16.7 40.4 6.7 1.2 16 D -38.05
Malaysia 14.7 29.8 9.6 1.6 16 E -11.27
U.K. 16.4 29.1 9.3 2 17 D -1.26
Hong Kong 14.9 36.1 11.2 1.3 17 D -10.98
Colombia 16.8 31.8 10.5 1.4 18 E -17.88
China 14 45.2 10.3 1.8 20 E -18.18
Israel 16.3 41.8 10.6 1.7 22 D -7.61
Thailand 16.8 35.2 10.2 2.2 22 E -16.69
Hungary 17.4 66.5 7.2 1.9 22 E -2.19
Germany 18.7 41.1 9.3 1.9 23 D -6.22
South Africa 17.5 32.3 11.5 2.2 24 E -15.75
Australia 19.5 26.4 13.2 2.2 25 D -2.4
Brazil 19.1 35.9 11.4 2.1 25 E -1.14
Mexico 17.8 46.5 8.6 2.1 25 E -18.95
Japan 22.1 64.5 10.3 1.6 27 D -6.19
Canada 21.9 38.8 11.1 2 27 D -0.57
Taiwan 21.9 36.5 11.6 2.3 27 E -1.24
France 22.5 39.6 11.5 1.9 28 D -0.94
Finland 23.3 29.6 12.9 2.3 29 D -45.07
Indonesia 17.6 42.9 11.8 2.7 31 E -12.33
Belgium 23.8 38.1 13.6 2.1 32 D -7.5
Philippines 18.7 57.3 12.1 2.4 33 E -36.94
Peru 17.1 50 16.3 2.6 33 E -18.67
Sweden 22.1 40.1 15.8 2.8 34 D -1.32
New Zealand 30 37.5 15.8 3 35 D -1.92
Netherlands 26 53.8 15.8 2.6 37 D -1.01
Switzerland 26.9 44.5 20 3.3 39 D -1.05
Ireland 50.9 79.8 18.2 2.4 39 D -23.21
India 22.9 88.7 14.9 3.1 39 E -21.14
U.S. 30.9 77.6 18.5 4 42 D -0.29
Denmark 33.9 82.7 21.5 4.5 43 D -0.87

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