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  • Eric Hahn

The World is Cheap


I love this chart from Chris Konstantinos at RiverFront Investment Group. He’s showing us a record spread between what investors are willing to pay for US stocks vs International stocks on forward price-earnings ratio…

Looking a 12-month forward P/E ratio at the MSCI All-Country World Ex-US index, we are currently at the largest valuation gap between US and non-US markets in the 15+ years of data to which we have access.

Josh here – We remain unapologetically overweight anything but the S&P 500. It’s not a market prediction, it’s an awareness of expected returns. When the US stock market sells at a 30 CAPE and yields just 2%, you can’t expect home run performance going forward over any meaningful time frame. It forces you to be open-minded about other asset classes, if you’re a serious investor.

#Assetallocation #repost