Isaac Presley at Seeking Delta sent me an excel spreadsheet of Price/Earning, Price/Book and Price/Sales ratios for 71 countries. Click on the above link to see his post.

Using Presley’s data, Ross Perez and Ellie Fields at Tableau Software created the following interactive map. It is difficult to see all 71 countries at once so the initial view is the G-20.

Please give the map about 10 seconds or so to load. Hover your cursor over any circle or any line on the data (except the name of the country itself) to see additional details.

http://public.tableausoftware.com/javascripts/api/viz_v1.jsEquity Value Worldwide
Equity Value Worldwide

Caveats

Case-Shiller 10-Year normalized PE ratios are a far better measure of value. Unfortunately, we do not have that data for every country. As an example, however, the Case-Shiller PE ratio for the US is currently 23.

On a price-to-book ratio, Japan is the best value by far in the G-7. Once again however, these metrics assume accurate book values. I am not particularly apt to agree with most of them.

Absolute vs. Relative Values

The idea that one should buy “relative values” just to buy something is flawed. Yet, except for Japan with a price-to-book value near one, with most corporate debt wiped off corporate books, I see little “absolute value” elsewhere.

The problem with Japan is the Yen. To invest in Japan one needs to hedge that Yen exposure or a declining Yen could wipe out most equity gains.

Meanwhile the market grinds higher and higher.

Bernanke has succeeded in creating another bubble in equities, junk bonds, and leveraged-buyouts. From any realistic perspective, this is one strenuously overvalued equity market, globally, yet nothing prevents the bubble from getting bigger.

The greater fool’s game is in full swing. When it stops is anyone’s guess. I sure don’t know.

Mike “Mish” Shedlock
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