Tuesday, November 11, 2008

Comparing Valuations In China And The U.S.

Since US markets peaked last October, the S&P 500 is down 41%, while China's Shanghai Composite is down 68%. Over the same time frame, the trailing 12-month P/E ratio of the S&P 500 has gone from 19.62 to 20.21, while the P/E ratio of the Shanghai Composite has fallen from 45.85 all the way down to 14.31. So even though China's equity markets have declined much more than the US on a percentage basis, earnings have held up much better. China is still considered an emerging market and is experiencing growth of 8% or so. Growth stocks generally have much higher valuations than value stocks, and it's surprising to see China's P/E at 14.31, or 6 points lower than the S&P 500's P/E of 20.21.

Spxchinaprice

Spxchinape

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Lunch is for wimps

Lunch is for wimps
It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.