This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.
Very few investors need to be reminded that the US market has hugely outperformed the rest of the world in the historic bull market following the Great Financial Crisis. However, generally, UK investors have been underweight in US stocks and conversely overweight in non-US stocks (especially preferring the UK). A reason often given for justifying this is that the US trades at a higher P/E ratio than other markets versus history, especially relative to the UK and is therefore expensive. We think this overly simplifies the issue and use some fundamental investing theory to test the claim that the US is unjustifiably expensive…
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