Most of the Important DM Countries Have Eclipsed the Previous High Median P/S RatioSeptember 04, 2014
We’ve argued at length here, here, here, here, here, and here that regardless of index level market-cap-weighted valuation statistics, the median stock in the developed market is trading at a premium to the previous peaks seen in 1999 and 2000 (chart 1). This is most clearly seen by examining the price to sales ratio (the least manipulatable valuation statistic). We can see from the charts below that many of the most important countries in the developed markets (US, UK, Japan, Germany, Australia, and Sweden) have all seen their median stock trade at a higher price to sales ratio during this cycle than in 2007. So while it may be true that the S&P 500 as a whole (which is heavily dominated by very few mega cap companies) may be trading at around average valuation levels relative to the last 15 years (a period which has seen much higher than average valuations relative to the last 100 years), the median stock in the developed markets continues to trade at peak multiples seen in 2007 and 2000.