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04-Feb-2018<br />

World's most expensive stock market | Asset Allocation<br />

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Robert Shiller source: project-syndicate.org January 23, 2018 translation for<br />

AssetAllocation.ru cannot install all the reasons for high prices in the stock market in United<br />

States. This alone should remind all investors on the importance of diversification, and that<br />

should not be given too much weight United States stock market in its portfolio.<br />

The level of stock markets is very different in different countries. And now the leader of<br />

pereocenennosti is the United States. That everyone can't wait to find out what is the cause<br />

— and whether justified the current level of the stock market.<br />

We can get a simple and clear evaluation of the differences between countries, if you look at<br />

the ratio of prices and profits. I've been a long time advocate cyclically adjusted<br />

price/earnings ratio (cyclically adjusted price-earnings, CAPE), which we with John<br />

Campbell, currently teaches value at Harvard, developed 30 years ago.<br />

Coefficient of the CAPE is the real (inflation-adjusted) price of the stock divided by the<br />

average over ten years of real earnings per share. Barclays Bank in London collects 26<br />

countries for the CAPE (I advise Barclays on their products related to CAPE coefficient). As<br />

of December 29, the highest ratio in the world, the CAPE was at United States.<br />

Let's see what do these ratios.<br />

Next ...<br />

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