WSJ lists global PE10

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letsgobobby
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WSJ lists global PE10

Post by letsgobobby » Sun Nov 17, 2013 6:26 pm

http://online.wsj.com/news/interactive/ ... 0356373734

They say the source is Cambria Investment Management.

I have never seen such a detailed list of PE10s. The list is very interesting. The only stock markets more expensive than the US (current PE10 per this list is 24.35) are the Phillipines, Colombia, and Sri Lanka.

Cheapest on the list are Greece, Argentina, and Ireland with PE10s of 4.03-6.94.

Rodc
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Re: WSJ lists global PE10

Post by Rodc » Sun Nov 17, 2013 7:15 pm

That is interesting.

I don't think you can simply compare them though. Given the risk is different in different markets you should expect different "fair market" values (if such a thing exists, otherwise think average).

For example in a very high risk market like Greece of course the P/E10 is much lower than for the US, even if they represented the same level of high valuation.

That said, lots of reasonably solid economies well below the US at the moment.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

DetroitRed
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Re: WSJ lists global PE10

Post by DetroitRed » Sun Nov 17, 2013 7:32 pm

Accounting standards in different countries are often not comparable. US standards are very different from the international standards (IFRS), so the earnings part of the PE is not comparable across many countries.

Many countries are moving to IFRS, but that hasn't happened yet (and don't hold you breath for the US to convert).

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grayfox
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Re: WSJ lists global PE10

Post by grayfox » Sun Nov 17, 2013 7:34 pm

Good Information.

I would not bet on any individual country ETF. But you can buy well-diversified ETFs for Europe, Pacific Rim, Emerging Markets, All-World ex-US, or the entire world. Any of these choices has lower valuations than U.S.

As a minimum effort, I would be buying Total World Stock VT over Total US Stock VTI


Vanguard Total Stock Market ETF (VTI) YTD = 29.34%
United States 100.0%

Vanguard FTSE Europe ETF (VGK) YTD = 19.41%
United Kingdom 33.1%
France 14.5%
Switzerland 13.7%
Germany 13.5%
Spain 5.1%
Sweden 4.8%
Netherlands 4.6%
Italy 3.5%
Belgium 1.7%
Denmark 1.8%
Finland 1.3%
Norway 1.2%
Austria 0.4%
Ireland 0.4%
Portugal 0.3%
Greece 0.1%
Other 0.0%
Jersey —

Vanguard FTSE Pacific ETF (VPL) YTD = 18.80%
Japan 55.1%
Australia 20.5%
Korea 11.3%
Hong Kong 8.8%
Singapore 3.9%
New Zealand 0.4%
Other 0.0%

Vanguard FTSE Emerging Markets ETF (VWO) YTD = -4.45%
China 21.0%
Brazil 14.5%
Taiwan 13.1%
South Africa 9.4%
India 9.0%
Russia 7.1%
Mexico 5.4%
Malaysia 4.8%
Thailand 2.9%
Indonesia 2.7%
Chile 2.0%
Turkey 2.0%
Poland 1.7%
Philippines 1.5%
Colombia 1.2%
United Arab Emirates 0.6%
Hungary 0.4%
Czech Republic 0.3%
Peru 0.3%
Egypt 0.1%
Morocco 0.0%
Other 0.0%
Hong Kong —
Korea —

Vanguard FTSE All-World ex-US ETF (VEU) YTD = 12.53%
Japan 16.0%
United Kingdom 15.3%
France 6.7%
Canada 6.5%
Switzerland 6.3%
Germany 6.2%
Australia 5.9%
China 3.8%
Korea 3.3%
Brazil 2.6%
Hong Kong 2.6%
Taiwan 2.4%
Spain 2.3%
Sweden 2.2%
Netherlands 2.1%
South Africa 1.7%
India 1.6%
Italy 1.6%
Russia 1.3%
Singapore 1.1%
Mexico 1.0%
Belgium 0.8%
Denmark 0.8%
Malaysia 0.8%
Finland 0.6%
Norway 0.6%
Indonesia 0.5%
Thailand 0.5%
Chile 0.3%
Israel 0.4%
Turkey 0.4%
Philippines 0.3%
Poland 0.3%
Austria 0.2%
Colombia 0.2%
Ireland 0.2%
Czech Republic 0.1%
Egypt 0.0%
Hungary 0.1%
New Zealand 0.1%
Peru 0.1%
Portugal 0.1%
United Arab Emirates 0.1%
Greece 0.0%
Morocco 0.0%
Other 0.0%
Argentina —
Luxembourg —
Mongolia —

Vanguard Total International Stock ETF (VXUS) YTD = 12.93%
Japan 15.6%
United Kingdom 15.5%
Canada 7.1%
France 6.3%
Germany 6.0%
Switzerland 6.0%
Australia 5.8%
China 3.7%
Korea 3.3%
Taiwan 2.8%
Brazil 2.5%
Hong Kong 2.4%
Spain 2.2%
Sweden 2.2%
Netherlands 2.1%
Italy 1.7%
India 1.6%
South Africa 1.6%
Russia 1.2%
Singapore 1.2%
Mexico 1.0%
Denmark 0.9%
Malaysia 0.9%
Belgium 0.8%
Finland 0.7%
Norway 0.7%
Thailand 0.6%
Indonesia 0.5%
Chile 0.4%
Israel 0.4%
Turkey 0.4%
Austria 0.2%
Ireland 0.2%
Philippines 0.3%
Poland 0.3%
Colombia 0.2%
New Zealand 0.2%
Czech Republic 0.0%
Greece 0.1%
Hungary 0.1%
Peru 0.1%
Portugal 0.1%
United Arab Emirates 0.1%
Argentina 0.0%
Egypt 0.0%
Morocco 0.0%
Other 0.0%
Jersey —
Virgin Islands British —

Vanguard Total World Stock ETF (VT) YTD = 19.92
United States 48.1%
Japan 8.1%
United Kingdom 8.0%
Canada 3.7%
France 3.3%
Germany 3.1%
Switzerland 3.1%
Australia 3.0%
China 1.9%
Korea 1.7%
Taiwan 1.4%
Brazil 1.3%
Hong Kong 1.3%
Spain 1.2%
Sweden 1.1%
Netherlands 1.1%
Italy 0.9%
India 0.8%
South Africa 0.8%
Russia 0.6%
Singapore 0.6%
Denmark 0.5%
Malaysia 0.5%
Mexico 0.5%
Belgium 0.4%
Finland 0.4%
Norway 0.4%
Indonesia 0.3%
Thailand 0.3%
Chile 0.2%
Ireland 0.1%
Israel 0.2%
Philippines 0.2%
Poland 0.2%
Turkey 0.2%
Austria 0.1%
Colombia 0.1%
Greece 0.1%
New Zealand 0.1%
Portugal 0.1%
United Arab Emirates 0.0%
Czech Republic 0.0%
Egypt 0.0%
Hungary 0.0%
Morocco 0.0%
Other 0.0%
Peru 0.0%
Argentina —
Luxembourg —
Marshall Islands —
Mongolia —
Panama —
Gott mit uns.

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sperry8
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Re: WSJ lists global PE10

Post by sperry8 » Mon Nov 18, 2013 6:28 am

That's great - I hope they keep publishing it. Helpful when making buy decisions.
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bigDanShan
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Re: WSJ lists global PE10

Post by bigDanShan » Mon Nov 18, 2013 8:23 am

I wonder about the value of the measures. Take Ireland as an example. A massive bubble economy, the Celtic Tiger, massively inflated earnings for the last decade. Most of the big financial institutions went bust or are massively owned by the Irish government at this stage. Is a P/E10 of 7 really cheap under such circumstances given the historical earning include companies that no longer exist or are largely government controlled?
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letsgobobby
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Re: WSJ lists global PE10

Post by letsgobobby » Mon Nov 18, 2013 8:36 am

I agree that aside from the US, I don't know that this is useful for any specific country in isolation, so other than deemphasizing US and increasing total international, I'm not acting on it. But it's fun to see the list, and to ponder the circumstances which have contributed to each ratio. Like is Greece a screaming bargain or a value trap? Are the Philippines overpriced or Japan of the 1950s? I sure won't be buying any Pakistani ETFs just because their PE10 is 10!

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prudent
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Re: WSJ lists global PE10

Post by prudent » Mon Nov 18, 2013 8:56 am

I agree with the observation that comparisons are not applicable when the accounting standards are different. When accounting standards are different, how can you compare P/E ratios?

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grayfox
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Re: WSJ lists global PE10

Post by grayfox » Mon Nov 18, 2013 9:22 am

I just heard a report in NPR with David Wessel, WSJ economist, about 3rd Quarter economic growth

U.S. 2.8%
Japan 1.9%
Eurozone 0.4%

Would that explain valuations?

U.S. 24.35 (GDP = 16,238 billions USD)
Japan 19.56 (GDP = 5,150 billions USD)
Eurozone** (GDP = 12,752 billions USD)
..Germany 15.58
..France 13.98
..Italy 8.72
..Finland 12.97
..Spain 10.38
..Austria 9.16
..

** Eurozone : Officially called euro area, an economic and monetary union (EMU) of 17 European Union (EU) member states that have adopted the euro (€) as their common currency and sole legal tender.
Gott mit uns.

letsgobobby
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Re: WSJ lists global PE10

Post by letsgobobby » Mon Nov 18, 2013 10:04 am

grayfox wrote:I just heard a report in NPR with David Wessel, WSJ economist, about 3rd Quarter economic growth

U.S. 2.8%
Japan 1.9%
Eurozone 0.4%

Would that explain valuations?


if one believes in PE10 at all, it's because one believes PE10 captures psychology, not facts. If it accurately captures future earnings grown, then it's meaningless as an indicator. If it accurately captures psychology (in this case, overpessimism about the future of earnings growth), then it *may* have meaning. So the answer to your question is, who knows?

DetroitRed
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Re: WSJ lists global PE10

Post by DetroitRed » Mon Nov 18, 2013 11:25 am

prudent wrote:I agree with the observation that comparisons are not applicable when the accounting standards are different. When accounting standards are different, how can you compare P/E ratios?


I don't know anyone who does this.

Someone could theoretically standardize the earnings numbers to make them comparable, but that's extremely difficult to do and would entail making a lot of subjective decisions.

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