Revisiting Valuations

After this nice rally, US stocks aren’t cheap, according to the popular CAPE valuation metric, which averages the last 10 years of earnings in the P/E ratio.  As you might expect, many European and beaten down EM countries are undervalued historically speaking.  This doesn’t mean that the rally will stop or the lower valued countries will start to outperform, just that there is added risk, since P/E expansion is less of a probability from here.

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