Each quarter we update the equity valuations of the markets we invest in. Being primarily interested in longer term valuation metrics, we use the CAPE ratio, which applies real earnings per share (EPS) over a 10-year period to smooth out fluctuations in corporate profits that occur over different periods of a business cycle. The above chart has been updated to 31 March 2020.

Some noteworthy observations as at 31 March 2020 include:

CAPE ratios of all equity markets prior to the GFC were substantially higher than what they were in February 2020, with the exception of US equities

– Leading to the recent sell-off, US equity and Global REIT valuations were well above those of the other equity markets

– Asia Ex-Japan’s CAPE ratio fell the least and is fairly close to its trough GFC level

– Australian & Int’l-Ex US CAPEs is moderately higher now than they were at their trough GFC levels

– Global Infrastructure’s CAPE ratio is now around its trough GFC level

– While US equity and Global REIT CAPE ratios fell the most, they are now twice their trough GFC levels


The CAPE ratios for each equity market presented are quite compelling other than US equity & REIT markets. Since 31 March 2020, equities have rallied strongly, which signals that the market expects the recovery to be V-shaped or perhaps a test-tube like U-shaped. If that indeed ends up being the case, then the 31 March 2020 valuations offer excellent buying opportunities. However, if the economic disruption ends up being more protracted than what the market is currently implying, we can expect another meaningful leg-down. Markets are highly volatile and very sensitive to both positive and negative news. We could be in for some ride !?