linear algebra

Will Emerging Markets Maintain Their Premium?

Loking at yourchart, the only measure on which the emerging markets stocks are trading at a premium to U. S. Stocks (regardless of capitalization) is price to book. And I'll bet, given the relative levels of M&A versus de novo capex, that there is a great deal more good will on the books in the Sates than there is in developing world economies. Also, something tells me that the expectations of near term earnings growth in the emerging markets vs. the States, implied from the respective differences between trailing 12 months p/es and forward earnings, is a great deal more reasonable there than it is here. So, while emerging markets are trading at a premium to historic valuations, and global equities generally, I don't see the premium to U.S. valuations, though that may suggest that U.S.equities are the over valued asset class and not that more exposure to emerging markets is dictated.