Country CAPE Ratio Preview: Ireland, Russia Come In Low

The country CAPE ratios researched by Mebane Faber have shown in no uncertain terms that they are a reliable pointer to under-valued or overpriced equities by country.

Countries that presented low CAPE ratios as of end-2012 have generally rewarded investors with high returns during 2013 as per Mebane Faber’s analysis, and the chart below:

Source: www.mebanefaber.com

Country CAPE ratios are good barometers

Of special interest is the fact that the five countries at the bottom of the CAPE heap as of end-2012 went on to generate 20.74% returns in 2013.

Contrarily, the five countries with the highest CAPE ratios as of 2012 lost 17.81% over the following year.

Of course, a couple...