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What's Cheap in the World Today?

By Dr. Steve Sjuggerud
Monday, June 30, 2014

You probably haven't noticed, but boring government bonds are up double digits this year...
 
U.S. stocks continue to push to all-time highs as well... even Europe is soaring to multiyear highs.
 
Today, we've got uptrends around the globe. The big question is... after so many investments have run up so high, where is the value in the world today? Is there any left out there?
 
In short, YES!
 
Let me show you exactly where the value is right now...
 
There are dozens of ways to size up what's cheap...
 
One classic measure of value is the price-to-earnings (P/E) ratio. But like most value measures, it isn't perfect on its own.
 
To fix that problem, we built an in-house value indicator for a few dozen global markets. We call it the "True Wealth Systems (TWS) Value Composite Measure."
 
These TWS Value Composite readings give us a simple way to see where the value really is in the world.
 
And today, there is a clear winner...
 
Let me show you what I mean by looking at a few major developed countries' stock markets.
 
The table below shows each country's historical premium or discount relative to its own history, based on our TWS Value Composite. In addition, it shows each market's premium/discount to U.S. stocks – the benchmark for comparison for developed markets.
 
Country
TWS Value Composite
Relative to Its Own History
Premium/Discount
Relative to the U.S.
Hong Kong
-5%
-38%
Germany
10%
-13%
Australia
12%
-11%
Europe
12%
-20%
UK
16%
-18%
United States
19%
-
France
26%
0%
 
What you can see is, outside of Hong Kong, there isn't much value in these major developed stock markets today, relative to their histories. That doesn't mean they can't go higher, of course. It just means they are "fairly valued" based on history.
 
But when you look at the major emerging markets, the story changes...
 
The table below shows the full details. The only change in this table versus the table above is the right column... It shows each country's premium/discount to emerging markets in general, as opposed to the United States. Take a look at a few selected emerging markets...
 
Country
TWS Value Composite
Relative to Its Own History
Premium/Discount
​Relative to Emerging Markets
Russia
-38%
-58%
Greece
-34%
-73%
China
-33%
-50%
Emerging Markets
-8%
-
India
-8%
26%
Brazil
10%
10%
South Africa
25%
31%
Mexico
48%
65%

The first thing that jumps out is, aside from Mexico, the major emerging markets are cheap, based on history.
 
Of course, places like China, Greece, and Russia aren't the most savory places to invest today. But when you look around the world, these emerging markets offer the best value.
 
I expect these dirt-cheap markets to be the big winners over the next few years. With over $100,000 of data at our disposal, our computers say emerging markets offer the absolute best value around the globe.
 
If you don't at least have these beaten-down emerging markets on your radar, you're making a mistake. They're the best value in the world today.
 
Good investing,
 
Steve




Further Reading:

Find more investment advice from Steve here:
 
This Is When Interest Rates Will Rise... Here's What to Do
There's actually plenty of room for stocks to go much higher from here – even through the end of 2016...
 
The Absolute Best Way to Buy European Stocks
One simple investment will give us all of the upside of European stocks... but protection from any falls in the euro...
 
Is This The End of the Housing Recovery? NO!
Housing affordability is still near record highs. And the most important person for the housing market is on our side... 

Market Notes


NEW HIGHS OF NOTE LAST WEEK
 
Coca-Cola (KO)... Big Soda
Intel (INTC)... Big Cheap Tech
Microsoft (MSFT)... Big Cheap Tech
Johnson & Johnson (JNJ)... Big Pharma
Eli Lilly (LLY)... Big Pharma
Chevron (CVX)... Big Oil
ExxonMobil (XOM)... Big Oil
Hess Corp (HES)... Big Oil
BP (BP)... Big Oil
Baker Hughes (BHI)... oil services
Schlumberger (SLB)... oil services
Halliburton (HAL)... oil services
Devon Energy (DVN)... oil and gas production
Apache Corp. (APA)... oil and gas production
Chesapeake Energy (CHK)... oil and gas production
ConocoPhillips (COP)... oil and gas production
CSX (CSX)... railroads
FedEx (FDX)... shipping
Caterpillar (CAT)... heavy equipment
Alcoa (AA)... aluminum miner
Weyerhaeuser (WY)... timberland
Dow Chemical (DOW)... chemicals
Monsanto (MON)... "GMO" seeds
Yum Brands (YUM)... fast food
Constellation Brands (STZ)... booze
Gannett (GCI)... newspapers
Wells Fargo (WFC)... bank

NEW LOWS OF NOTE LAST WEEK
 
Not many... it's a bull market!

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