This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Country ETFs vs. U.S. Stock ETFs

NEW YORK ( ETF Expert) -- Over several decades, I have produced content for radio, television, magazines and Web sites. One of my longest-standing themes has been the silliness surrounding what constitutes a "bargain" in a stock market.

Advocates for employing price-to-earnings ratios (P/Es) debate whether to use trailing 12 months or forward 12 months or trailing 10 years. Some even adjust the target based on comparable bond yields, historical averages and inflation, while others decide "appropriate" P/Es based on a particular sector.

Still others believe P/Es are entirely over-rated, and prefer to use price-to-sales ratios or price-to-book in making their "call." Meanwhile, some may rely more on price alone such that, if the S&P 500 were 15% below a high, that would represent a 15% discount.

Simply put, if gurus cannot agree on what determines a decent value, how can investors be any more proficient at selecting sure-fire winners for the so-called long haul? They cannot... or we might all be tripping over ourselves to buy Apple (AAPL) at $425.

In spite of widespread inconsistencies and inanities, I admit to a fondness for historical data. I recently came across an article that presented a country-by-country breakdown for current and median 10-year price-to-earnings ratios (a.k.a. CAPE or cyclically adjusted P/Es). The authors provided evidence that the best investment returns in U.S. stocks occurred when buying and holding U.S. stocks for a decade at the start of a calendar year when the average cyclically adjusted P/E was 30% below the median.

Now, as much as the value-seekers believe there is a Holy Grail in finding good things to buy-n-hold, I recognize the mathematics of compounding require unemotional methods for risk reduction. Collapses, crashes and market catastrophes tend not to discriminate.

Indeed, for all the attention placed on the S&P 500 approaching its highs of 2007, investors who minimized exposure to the 2007-2009 disaster were more likely to recover in 1-1 1/2 years rather than 5 1/2 years.

Nevertheless, it may be reasonable to assume one is taking a calculated risk when he/she invests in a country that is currently 25%-30% below its median cyclically adjusted P/E. Here, then, are five countries with roughly 25 years of data (or more) that meet this valuation criteria... and a few prominent countries that might be considered "overvalued."
Country 10-Year P/Es: Recent And Median
Current CAPE Median CAPE Difference
Singapore 12.5 21.7 -42.4%
France 12 19.7 -39.0%
Belgium 10.3 14.8 -30.6%
Brazil 12.1 17.2 -29.7%
Taiwan 14.3 19.4 -26.3%
Thailand 16.4 12.1 26.2%
United States 20.7 15.9 23.2%
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.99 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%
TSLA $151.04 0.00%
YHOO $27.04 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs