Tuesday, September 9, 2014

How Expensive Are U.S. Stocks Relative To Markets Around The World?

Mebane Faber, author of one of the year's best books; Global Value, put together the chart below ranking stocks around the world from least expensive to the most expensive. He averaged the CAPE P/E ratio, dividends, book values and cash flows.



The United States is the fourth most expensive stock market in the world using this average (third most expensive using only CAPE). Does this mean that I would prefer to own a broad basket of stocks in Greece, Austria, Hungary, Italy, Russia, Portugal, ect. vs. a broad basket of stocks in the United States?

Yes.

Although I'm not currently buying stocks or bonds in any markets around the world, if we move back toward some sort of risk off movement ever again in my lifetime then I will purchase some of the more inexpensive stocks in the most inexpensive countries.

For more on this topic, see the presentation below that Faber recently gave to a team at Google on finding value globally:



And for more see:

Global & Historical Shiller CAPE Price To Earnings Ratios

1 comment:

  1. This is a excellent video, thank you as well as a Great site

    ReplyDelete