I am a little late on this as I have been busy with other endeavors. Nevertheless here are the top five most undervalued markets:
- Czech Republic
- Russia
- Spain
- Portugal
- Poland
And the most expensive markets:
- Denmark
- US
- India
- Ireland
- Switzerland
I am mostly looking at developed or more mature developing markets. Obviously, there is excellent undervaluation in many frontier markets. However, in many cases they are difficult to invest in or most people would never put money into them even if they could.
As I have said before CAPE is not a timing tool. The US has been at the top of overvalued markets list for several years and yet, until recently, it was one of the better performing stock markets in the world.
CAPE is a useful tool for identifying relative over valuation and undervaluation.
The academic literature is clear. Selling overvaluation and buying undervaluation, over long periods, will lead to better than average returns.
Check out my article on how I use CAPE as a tool for investing.