Everything Is Expensive at Once: This Global Valuation Chart Explains Why Risk Is Rising

Equity valuations across regions are now

at a historical high measuring using the

12-month forward price to earning

multiples across major global equity

markets. So obviously what we're looking

at is the price to earning ratios across

several markets. It means that that

chart is about valuation reality and the

conclusion is uncomfortable. Almost

every major equity market on Earth is

now priced at or near the top of its

historical valuation range. Despite

radically different growth prospects,

productivity trends, demographics, and

fiscal reality, there's a disconnect

here because when everything is

expensive at the same time, future

returns compress together and

diversification quietly fails. That is a

topic that is essential for you to

grasp.

You need to understand that stocks

movements are like it's like physics and

I'll explain to that more in details to

my um patron and and to my members but

essentially what we do is we try to

understand what's going to happen next

and the the the idea behind statistics

is that each event is independent

but that's not so right and uh when

everything collapses everything collaps

at once. So then how could you measure

this, right? There's a certain quote

unquote chaos theory going on here and

you need to at least grasp that concept

and you need to get away from the idea

that you're looking for returns. You

need to understand the concept that you

need to find out what kind of risk is

going on. Where what where is the risk?

So first of all, let's try to understand

what the chart looks like. Well, each

vertical columns

represent the regional equity market.

United States, the world, Japan,

um, Asia-Pacific, Europe, China, United

Kingdom, right? You could see that.

Now, focus on the structure of each bar.

The light blue box,

that's the interqual range, the middle

50% of valuation

for the past 20 years.

Right? So it shows you how thick the

band is on the P valuation which is on

the left. The gray square

is the historical median valuation.

The median the vertical line extending

above and beyond

is captures a tenth to the 90th

percentage range. How you know how how

high can it go all the way to the end?

Nearly the full historical valuation

experience.

As you could see, the US is quite large,

right? It goes all the way from the top,

all the way from the bottom, the bottom

to the top, more than anyone else.

The orange diamond is a current

valuation where we are.

And here's a key analytical rule. When

the orange diamond

sits above the box, valuations are

stretched.

When it sits above the historical range,

the risk is elevated.

When every orange diamond sits near the

top of the same time, the system is

fragile. So let's start from the far

left, the United States. The current

forward PE is approximately 22.3.

That's not just above the median. It's

near the extreme upper end of the last

20 years. Look at it. And don't forget

this is for the last 20 years. This is

not last year. They looked at 20 years.

Basically, we went from a P of 12 to a P

of 22,

right? The past 12 years, 20 years, and

now we're at 22.3.

Historically, US equities have only

sustained these levels under very

specific conditions.

Obviously, rapid earnings acceleration,

falling interest rates, uh expanding

liquidity,

you know, stable geopolitics. Today,

what do we have?

slowing earnings growth, elevated real

rates,

tightening fiscal space, and rising

geopolitical risk.

So it looks like valuations are acting

as if risk no longer exists.

Now move one column to the right. US

excluding big tech.

Right? So this is the one right next to

it. We're removing the big tech, the big

seven that supposedly

increase the valuation. The valuation

drops slightly to 20, but it's still

historically elevated. This matters

because it disproves a common narrative.

It's only the magnificent seven. Bingo.

It isn't. Even stripping out mega cap

tech, US equities are still priced for

perfection.

This means the valuation premium is

systemic not just concentrated is not

just AIdriven not just specul. The

entire US equity complex is priced as if

margins

growth capital conditions will remain

permanently favorable.

History says that assumption rarely

survives

intact.

All right let's take a look at the

global markets. Now look rest of the

world.

The world AC world sits around 19 well

above the median. Japan XUS even markets

that feel cheap or expensive relative to

themselves. Valuation is not absolute.

It is con contextual. When the global

valuation rise together they become

correated risk not diversifier. There's

no escape. Now examine Europe emerging

markets and China. Europe sits around

14. All right, so it's cheaper. Emerging

markets around 13. Okay, so on the

surface they looks like bargain, but the

chart tells a deeper story. These

valuation are not low relative to

history. They are near the upper end of

their own range and they reflect

structural growth headwinds. Don't

forget Europe faces weak productivity,

demographic decline. For the first time

in France, there's more people dying

than being born.

energy constraints, emerging markets

faces dollar sensitivity,

capital flow volatility, geopolitical

fragmentation in China,

structural deleveraging their

demographic contraction. I mean, there's

nobody, they don't have kids. Persistent

capital skepticism.

Lower multiples do not automatically

mean

future returns when earnings durability

is in question.

So

what is the core message?

What what does it all mean? What can you

do with that information? Well, the core

message is is not to predict a crash.

Uh it is

I'm delivering uh a probability the

probability statement when valuations

cluster at historical highs.

Forward returns compress, volatility

rises, policy mistakes may matter most.

Shocks propagate faster. This is how

markets becomes vulnerable without

appearing unstable.

The danger is not exuberance, it's

complacency.

Valuations are priced in perfect

execution. No policy errors, no earnings

disappointment, no geopolitical

escalation and this is not how market

usually works.

So conclusion

this is a disciplinary chart

reminds us that valuation is gravity. It

does not pull every day but it always

pulls eventually. when every region is

expensive at the same time the region is

no longer where's the value it's how

much risk is being ignored and history

is very clear as to what happens next we

need to understand that what we're

saying is that

all the valuations are up across the

world and they are hitting their tops

now of course you could say well the US

is not doing as well as other countries

so let's move the money from the US to

the other countries fine P is 23, P is

16 in Europe. Makes sense.

Uh, and it's that's something that I

discussed to my members last week and I

showed them, you know, these are the

opportunities that you could this is

what you could get into to to buy this

this this European uh exposure from the

US.

But

keep in mind

that uh it's also overvalued

and uh when that collapses it may

collapse across the board. So what do we

do with that information? What but can I

still make money? Yes, you can.

You wait with the fat tail, the black

swan. This is how spit made 4,000%.

We want our cake and eat it too. I want

to get out at the right time and when

the market goes down, I want to make

money or at least make money to

compensate the loss I'm going to make

when this thing collapses. The signs are

there, right? And you don't want to act

after the fact.