Stuart Kirk explains why unpacking valuation ratios matters: a rising capex‑to‑sales figure can mask falling revenues, and a falling PE ratio may reflect panic selling or an earnings upgrade. He applies this lens to major indices. The S&P 500 forward PE ratio sits near 22 times, above its 10‑year average of 20, indicating prices are roughly a tenth high unless earnings catch up. Japan’s Topix has also climbed above its 15‑year mean of 16 times. In contrast, the FTSE 100 trades at 13 times versus a long‑run average of 12, with negligible earnings growth, making the UK exposure the least compelling.

Kirk’s portfolio shows a 30 per cent weighting in UK equities, only 10 % in Japan (down from 40 % a year ago), and a modest 10 % in the S&P 500. Emerging‑market funds remain cheap, with earnings rising despite a contracted PE ratio after the Strait of Hormuz closure. He suggests emerging markets may be a better bet than the UK, while keeping an eye on Europe for the next column.

The analysis underscores that simple ratios need context — earnings trajectories, currency effects, and leverage all shape true valuation.