David Rosenberg: It’s time to deploy profits from the U.S. stock market to the TSX

The valuation on the S&P 500 is now almost in the 20% most expensive of all time. History shows that now is not the time to be chasing the excessive price.

By far the cheapest sectors in terms of current valuations benchmarked against their past are energy and the real estate investment trusts. Health care and communication services are basically at fair-value and that is about it.The S&P 500 is one of the most intriguing stock market indices in the world and contains a wide gamut of high-quality companies.

While we have been and remain bullish on Japan and India as these two countries undergo a re-rating of their valuations for appropriate structural reasons, as far as cheap goes — you can pick up the Hang Seng right now at a rock-bottom 9x multiple or close to where the S&P 500 traded in August 1982, ahead of a nearly uninterrupted two-decade bull market. Only 5% of the time historically has the Hong Kong benchmark been this inexpensive.

Perhaps Emerging Markets are too risky for you. And it should be the case that U.S. multiples scare you right now. Much of Europe does look pretty attractive, I have to say, but it has a central bank riding the dogma wave and inflation is proving intractable. The latest data do suggest that the recession that did not come to Europe in the winter is now on its way.

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