A Warning Sign For US Stocks

A Warning Sign For US Stocks

over 3 years ago1 min

  • Over the past decade, US stocks have become much more expensive than those in the rest of the world.
  • According to a key valuation measure known as the cyclically adjusted price-to-earnings ratio (CAPE), US stocks currently cost ~2x as much as elsewhere.
  • Research firm Oxford Economics reckons this is due to American companies encountering less competition in their home markets, allowing them to boost prices.
  • But, if history is any guide, non-US stocks should give better returns than US stocks over the coming decade – i.e. if the blue line tracks the red line higher in coming years.


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