O'Reilly logo

Value Investing: Tools and Techniques for Intelligent Investment by James Montier

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 27. Overpaying for the Hope of Growth: The Case Against Emerging Markets[27]

  • Investors seem to be funnelling into any investment opportunity that offers them the hope of growth. Nowhere is this more evident than in the context of the emerging markets. I have a penchant for following the advice of Sir John Templeton, 'To buy when others are despondently selling and to sell when others are greedily buying.' So let me present a bear case on the emerging markets.

  • Let us start with valuation. Emerging markets (EMs) are trading at a distinct premium to developed markets. For instance, EMs are on a trailing P/E of 22×, vs a 14 × multiple for the developed markets. Using our favoured valuation measure – the cyclically adjusted PE, emerging markets are trading on 40×! This is the same sort of valuation that developed markets reached during the dotcom madness.

  • Indeed ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required