- The Big Picture - http://www.ritholtz.com/blog -
How Cheap Are Equities ?
Posted By Barry Ritholtz On February 14, 2013 @ 11:30 am In Contrary Indicators,Earnings,Investing,Valuation | Comments Disabled
To answer that question, look at the chart above, courtesy of Société Générale’s Albert Edwards, who asks the question “Are equities really unambiguously cheap?“. (Cyclical Earnings charts after the jump).
Shiller’s CAPE chart shows that while US equities are fairly reasonably priced, they are not, to use Edwards term, “unambiguously cheap.” But for about a week in March of 2009, they were, but if you blinked you may have missed it.
Europe, on the other hand, appears to be appreciably cheaper than US equities. (Funny how recessions tend to do that). We have about a 16% European weighting, primarily through ETFs like GAL and DVYE.
Regardless, contrarians may wish to take note of this from a valuation perspective.
Are equities really unambiguously cheap?
Albert Edwards, Global Strategy Weekly
Société Générale, February 14, 2013
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2013/02/how-cheap-are-equities/
URLs in this post:
 Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/02/cyclically-adjusted-PE.jpg
 Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/02/cyclically-adjusted-price-cashflow.jpg
Copyright © 2008 The Big Picture. All rights reserved.