BRK-B is pretty good too wrote:
I subscribe to Meb Faber's newsletter - he puts out updates on all the countries of the world's capes.
Here are the 12 cheapest - all with CAPES 10.3 or lower. The US is the 2nd most expensive, at 25. That is a huge difference and worth exploiting, I think.
obvi a few aren't investable - but the others you can buy an etf for. Lord I love etfs - before them you couldn't really do this strategy.
I'm not answering the OP's questions - but if anyone with a familiar name wants to have a discussion I'll be happy to participate.
Are the "cheap" countries deemed so on a straight comparison (absolute basis) to other countries? Or, is there some factoring in of each country's historical range & mean CAPE?
For example, let's say Lebanon's historical CAPE has ranged between a low of 5.0, and a high of 11.0, with a mean of 8.0. If it is currently at 11.0, that looks cheap on an absolute basis compared to a US CAPE of 15.0 (if the US was currently at 15.0). But, looking at each country's historical range, it doesn't look cheap.
these are absolute #s - not relative to the historical level of valuations.
I think your point has been addressed by Faber but I'm not sure where - If I come across it I'll post.
I would say that if the US is at 25 and you can get cheap euro countries for 10 or lower (greece = 4, Ireland 7!) then that is a large enough difference that historical differences prob don't matter much.
in other words, greece, ireland, italy and others are cheap enough that you have a big enough margin for error that historical valuations don't matter much.
FYI over the past year greece is up 50%, ireland 38%.
but russia and argentian are underperforming, which is alarming.
that' why mating cheap countries with the 200 day MA strategy is how I am doing this - buying all the cheap CAPE countries but selling if they fall below their 200 day.