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Rekenthaler Report

Have U.S. Stocks Become Too Expensive?

Addressing the question from a global perspective.

I had intended to rebut Ben Johnson's "Home Bias Blues" article, in which he argues that U.S. investors should hold more foreign securities. There are valid reasons for dining in, which I planned to raise. However, Ben acknowledges those arguments and counters them effectively. So … I agree with his column. This article will be no Point/Counterpoint

However, I do wish to examine one of Ben's side points, which is that now is a particularly good time to look elsewhere, because U.S. stocks have become unusually costly relative to their peers. Ben brandishes a chart, courtesy of Research Affiliates, showing that that U.S. stocks are now relatively expensive, while other countries' stocks look to be cheap. The obvious conclusion is to favor the latter over the former.