On this page, we aim to answer the question that many investors may be asking: if I have a dollar to invest today, where should I put it?
We do that by looking at valuations for a number of different assets classes, including stocks and bonds both at home and abroad, over the last 20 years. Because different assets use different valuation measures – for example, Emerging Market Equity uses Price-to-Book ratios, while U.S. Core Bond uses yield-to-worst, we standardize them by looking at z-scores: this tell us how many standard deviations away from average valuation the asset class is, either positive or negative.
The assets on the far-left of the page are the cheapest relative to their histories, while assets on the far-right of the page are the most expensive. Any asset with a positive z-score indicates it is richly valued relative to the past.
In addition to showing where these assets are valued now, we show where they were valued at the start of 2022. This shows how much markets have moved in a relatively short time period and indicates what opportunities may have arisen through a challenging year.