Many investors are focused on safety right now for understandable reasons: The world economic situation is unclear at best. What regions of the globe currently offer the most safety for investment dollars?
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I started by comparing the investment markets of countries and regions in terms of “Value,” defined as low price/earnings ratios and high dividend yields. The following graph shows the current situation:
As you can see, the United States is currently not offering the best value, since it has the highest P/E ratio and the second lowest dividend yields. But it’s not clear from this graphic which area does offer the best value. On a P/E basis, “Emerging Markets” and “Asia Without Japan” are the better buys, but “Australia and New Zealand” and “United Kingdom” boast the highest yields.
To resolve the confusion, I created a composite measure that adds earnings yield (the reciprocal of P/E) to dividend yield, and came up with the following scores:
And the winners are “Australia and New Zealand” and “Emerging Markets.” If you’d like to stay closer to home, Canada looks good.
Now you know. I hope you find this useful. For more investing ideas, visit PPCA Inc.