Valuations remain elevated for US stocks. For instance, the S&P 500’s forward P/E rose above 20 going into 2018. Since then volatile and declining stock prices have pushed the ratio down to below 17. The chart below shows the S&P 500 Forward P/E Ratio since April of 2006: Click to enlarge Source: Focus on Fundamentals, Legg …
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China used to be known as the “factory floor” of the world a few years ago as the country’s manufacturing industry was attractive to companies from the developed world due to cheap labor costs. However that is no longer the case. Wages in China have been steadily increasing making some manufacturers look for alternative cheaper …
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Australian and US equity real total returns have tracked each other since the 1900 as shown in the chart below: Click to enlarge Source: Philo Capital
The performance of various asset classes vary in any given year. For example, bonds earned higher returns than stocks during the dark periods of Global Financial Crisis(GFC) in 2008 and 2009. Similar to the diversification benefits across countries, it is also important to diversify across many asset classes such as small caps, mid caps, large …