Valuation Gap Chart: US vs. International Developed vs. Emerging Markets

As 2025 winds down, you will probably read a lot of articles remarking how international stock indexes have outperformed US stock indexes like the S&P 500 by a significant amount this year. This hasn’t happened in a while! Yet, the following chart shows that the gap in valuations is still very wide.

PE10 stands for the ratio of price to 10-year average trailing earnings (AKA CAPE ratio, or cyclically-adjusted P/E ratio) which attempts to smooth out earnings spikes. Image via TopDownCharts.