We determine the valuation of the top 26 markets of the world by market capitalization. For each market, we determine whether it is under or overvalued based on five different valuation indicators – Price to Earnings, Price to Sales, Price to Cash Flow, Price to Book and Dividend Yield.
Since different indicators may give different conclusions as to whether a market is under or overvalued, we test all the different combinations of indicators and select the best ones to put into a Composite Indicator.
- 100% objective and driven by bottom-up company data and estimates
- Composite Indicator gives one conclusion, not conflicting ones from different indicators.
- Best combinations selected mathematically
- Model’s effectiveness visually verifiable
Charts are updated up to 30 June 2021. Analysis is done on top-down basis, holding valuation indicator (e.g. Price to Earnings Ratio) constant throughout. This makes the markets look more overvalued than if we were to analyze on a bottom-up basis, adjusting valuation for factors such as growth (i.e. higher growth warrants higher PE). We will soon include analysis of markets on bottom-up basis.