Stocks in the Standard & Poor’s 500 Index have become some of the developed world’s cheapest, even though their collective price-earnings ratio hasn’t changed much from when they were among the most expensive five years ago.
The index’s valuation multiple stands at 17 today, the sixth lowest of 25 country benchmarks tracked by Bloomberg. In early 2011, two years into its post-financial crisis threefold climb to last year’s high, the ratio was just under 16, the seventh highest.
The metrics for Israel, Sweden and Japan also moved little as they went from among the 10 priciest to some of the least expensive. What happened? The others’ multiples grew faster, with a median increase of almost 8.