Valuation Thin Air topic

User Forum Topic
Submitted by gzz on September 3, 2017 - 1:44pm

I agree with Rich that US stocks seem expensive compared to the rest of the world.

Here are my thoughts on the other big world markets:

Japan: also seems to be richly valued

China: I don't trust Chinese company accounting, nor do I trust that the government won't just grab big chunks of private wealth, especially companies with large foreign investors. So many Chinese companies have turned out to be scams to rip off investors. And since I do not trust the accounting, I am not so sure that valuations are actually that low.

Western Europe: Europe stocks were so undervalued 5 years ago I put a fair amount into Vanguard's Euro stock ETF plus purchased a few telco stocks. And year after year, it underperformed US stocks. I gave up and sold when I needed extra cash for a down payment. I have no idea why Euro investors buy bonds with negative interest rates instead of Euro stocks with 4 to 5% dividends and P/E below 12, but year after year it happens.

I can't really complain about a 15% capital gain and years of 4% dividends, but I feel there is just something broken about Europe these days that will preclude valuations from ever coming close to US values. The telcos did even better, but still below US returns.

Russia: Like China, I have zero trust of the institutions there, especially that they will treat American investors fairly.

Turkey and Thailand: Whenever there is political turmoil in the news, the markets go down and I buy their country ETFs. I have done this about five times between the two, and been happy with the results.

Central Europe: I am intrigued by the line of countries from Estonia down to Croatia and their potential for strong catch-up growth to Western Euro standards, or even to some level about 75% of Western Europe. I can't find any low-cost ways to play this region however.