GeoffF100 wrote:Wikipedia has this to say:
"Originally derived for the US equity market, the CAPE has since been calculated for 15 other markets.[11] Research by Norbert Keimling has demonstrated that the same relation between CAPE and future equity returns exists in every equity market so far examined.[12] Research by others has also found CAPE ratios are reliable in estimating market returns over five to ten year periods in many international stock markets.[13][14][15]"
https://en.wikipedia.org/wiki/Cyclicall ... ings_ratio
Schiller has more recently devised a ratio that takes interest rates into account, but that does not appear to change the picture much at the present time. Ramin Nakisa talks about these ratios at great length on PensionCraft.
The UK market is only about 4% of the global market. My portfolio has some UK bias. UK stocks do not attract withholding tax, and overweighting them a little reduces portfolio volatility slightly. That has not greatly rewarded me so far. Much the same can be said of my emerging market exposure.
Yeah, of course the funny thing is that Fama and Shiller shared the Nobel prize in economics at the same time, Fama for the Efficient Market Hypothesis, which says it's impossible to reliably predict future returns consistently, and Shiller for, from his study of dividends, arguing that EMH was wrong.
Anyway, I wasn't particularly arguing for the UK, just commenting on the valuations aspect in it's historical context.
BTW, I've seen Shiller three times, each one a public lecture at the London School of Economics, and I recommend it if he comes anywhere near you. Then you too can be in the myriad of people whose hands shoot up when it comes the Q&A part to ask what he recommends people should invest in now. He always manages to, charmingly, side step those questions with some non-committal generalisations....