Ben Graham’s The Intelligent Investor was written with individual stocks in mind, but one of its core tenets, that investments can be over-punished for too long, is applicable to whole regions and markets. Arguably, this has been true of the UK ever since the Brexit vote, but after the latest stock market highs, is beaten-up Blighty still a bargain?
World-class companies have always found a home on the London Stock Exchange, but today many operate in unloved sectors of the economy. To an extent, there ought to be a discount for their cyclicality but, on the face of it, the earnings potential of these businesses has been undervalued in recent years, which has an effect on how we view the UK market.
Barclays’ version of the cyclically adjusted price/earnings (CAPE) ratio – which compares price with inflation-adjusted earnings averages over 10 years – has the MSCI UK index looking cheap relative to…
