Is the US Stock Market Expensive...and Emerging Markets Cheap ?

I have written many times about the Shiller CAPE ratio developed by Nobel Prize winning economist Robert Shiller. Although as Shiller himself acknowledges it is not a market timing vehicle..but as seen below high CAPE markets tend to have low future returns.

By CAPE the US market is at high valuations. Shiller has characterized it as high but not in "bubble territory". And since that CAPE has been above long term average for several years investors using it as a timing vehicle have missed quite a bit of the US market rally.

But given that high CAPE over the long term produces low returns and vice versa it is useful to look at relative CAPE around the world. Below is CAPE for the US and emerging markets. Emerging markets are well below long term average the US is currently  (as of May 28) at 27.3 which is 64.5% above its long term average. At gurufocus the Shiller P?E is updated daily.

This article is written by Burton Malkiel famous for the Random Walk on Wall Street classic. It includes  the graphs below and argues with this and other measures for a significant weighting in emerging market. The article appears from wavefront capital management and at the end advocates a quite complicated investment strategy using options....not something at all recommended in the book.

At the Research Affiliates website you can run CAPE ratios for a large number of countries.
Germany is slightly abover average CAPE . China, India, Japan are below long term average and Russia and Brazil at current CAPEs quite significantly below long term averages.