In One Chart: This 1 chart shows the U.S. stock market is the most expensive in the world

It was basically impossible for stock-market investors to lose money in 2017. In 2018, it might be difficult not to.

This past year was a historic one for equities. In the U.S., major indexes hit a record number of records while volatility basically disappeared. Other markets — including Europe, Asia, and emerging markets — also posted gains and this could be the first year ever where global stocks go an entire year with no negative months.

Those gains, however, have created equity valuations that are stretched by many metrics; By one measure the S&P 500 SPX, +0.03%  is at its most overbought level in 22 years. Prices have gotten so high that “finding value in stock markets at present is like looking for the sixpence in a Christmas pudding,” wrote Duncan Lamont, head of research and analytics at Schroder Investment Management. Value is there, “but it’s hard work finding it. Others round the table are likely to end up disappointed.”

This is true globally, and according to Lamont, of five major equity regions, only one “could arguably make a case for being attractively valued,” as seen in the following chart.

Lamont’s analysis looks at five major regions — the U.S., the U.K., Europe (excluding the U.K.), Japan and emerging markets — and evaluates them based on five valuation measures: price-to-book, dividend yield, both forward and trailing price-to-earnings ratios, and CAPE, or the cyclically-adjusted price-to-earnings multiple.

Based on these measures, the U.S. stands out as the most expensive of the major market regions, with prices at least 10% above their 15-year average on four of the five valuation metrics. The forward P/E is 19, above the historical average of 15, while the trailing P/E of 24 tops the long-term average of 18. The average U.S. price-to-book ratio is 3.3, compared with the historical average of 2.8.

Read: Stocks—at their 4th-most expensive level ever—are ‘smack-dab’ in ‘bubble territory’

Perhaps the most ominous reading is the CAPE, which compares the S&P to its average, annual inflation-adjusted earnings over the previous 10 years. At 31, it is above the 15-year average of 25, and nearly twice a long-term average of 16.8 that goes back to 1881. The only other times it has topped 30 occurred in 1929, before the Great Depression, and between 1997 and 2002, during the dot-com bubble.

The ratio was developed in part by Nobel-winning economist Robert Shiller, who has said he doesn’t see “the psychological preconditions for a spiraling downturn,” although he has also noted similarities between the current market and the environment that preceded the 13 most recent bear markets.

The fifth metric, dividend yields, shouldn’t offer much comfort to investors. The average comes in at 1.9%, which is essentially even with the long-term average of 2%. Other countries currently boast much higher yields. Australia, for example, has an average yield of 4.2%, according to Bespoke Investment Group.

See also: In one chart, why U.S. stock dividends don’t look all that impressive

The S&P 500 has gained nearly 20% in 2017.

While the other four regions Lamont studied look better than the U.S., they aren’t exactly screaming buys. Europe, excluding the U.K., is seen as overvalued on three of the five metrics, including all CAPE and both forward and trailing P/Es. On the other two categories, it is simply fairly valued. The U.K. by itself counts as overvalued on both trailing and forward P/E, but is seen as fairly valued otherwise.

An exchange-traded fund that tracks the U.K. equity market EWU, +0.38%  is up 16% thus far this year, while one that tracks Europe but excludes the U.K. IEUX, -0.34%  is up 14.2%.

Emerging markets are also seen as overvalued in three of the five valuation categories (both forward and trailing P/Es, and dividend yields). However, they are undervalued on the CAPE metric, which comes in at 15, below the long-term average of 16. One of the most popular EM ETFs VWO, +0.58%   is up 28% thus far in 2017.

Japan is the only region to not be significantly overvalued on any of the five metrics. While it is slightly elevated on price-to-book and the CAPE ratio, it is modestly undervalued on forward P/E and dividend yields. The trailing P/E, at 16, is more than 10% below its 15-year average of 18.

The country “offers an above-average dividend yield and is cheap on a price/earnings basis. It also has the added support that profit margins are expanding and both monetary and fiscal policy are supportive,” Lamont wrote. “However, even here some valuation indicators are on the expensive side and the market is highly exposed to risks from protectionism and North Korea.”

The most widely used Japan ETF EWJ, -0.15%  is up 22.5% in 2017.

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