Bull runs and crashes since 1999

Troughout the year I have been checking our performance against main indexes in U.S. and Europe. I have thought that we will do badly this year against our benchmark (MSCI All world country index or 'ACWI') until I actually checked out ACWI net performance this year in euros. Currently it's only slightly above year end 2016 level. Given continued bull run of broad U.S and European indexes in 2017, this seemed strange at first.

Then I checked dollar vs. euro and that partially explains what I am seeing.

USD to Euro in 2017 to date with 100 day moving average.

Chart courtesy of StockCharts.com.

Since I am measuring ACWI in euros decline of dollar against euro smoothes out bull run of dollar denominated investments.

Our market and currency exposure is heavily tilted to European markets and euro compared to ACWI being exposed much more heavily to U.S market and dollar. That's why falling dollar is tail wind for us.

If we look at the entire history of Euro (since its birth on 1.1.1999), we can see that euro had bull run from 2002 to 2008 which pushed dollar far from parity. Since 1.1.2009 dollar has climbed back towards parity, but not reaching it.

USD to Euro from 1.1.1999 to date with 100 week moving average.

Chart courtesy of StockCharts.com.

The bull run of both Nasdaq and Dow Jones indexes have been phenomenal from 2009 onwards. The crashes of 2000 and 2008 are clearly visible in the Nasdaq chart. Since 2000 was tech bubble it obviously does not show up in the DJ chart.

Nasdaq Composite index from 1.1.1999 to date with 100 week moving average.

Chart courtesy of StockCharts.com.

Dow Jones Industrial Average index from 1.1.1999 to date with 100 week moving average.

Chart courtesy of StockCharts.com.

Compare above two U.S indexes with Euro STOXX 600 index:

Euro Stoxx 600 index from 1.1.1999 to date with 100 week moving average.

Chart courtesy of StockCharts.com.

Quite a difference. It would be easy to jump into conclusion that European markets are still moderately priced in comparison to U.S markets that are far above their 2008 level. I am not going to do that just by looking at these charts.

Also, since our investments are either to individual companies or specific market segment ETFs the market as a whole isn't really meaningful yardstick. Outside of emerging markets, we do not invest via broad all-market-index tracking ETFs or other such instruments.

I am sure there are individual companies - especially within Nasdaq - that are priced sky high.

However, Looking at companies within our U.S portfolio (Micron, Intel, ..), I do not see alarming P/E or P/B levels when looking both at current and forward levels combined. Berkshire Hathaway is our highest priced investment in U.S. in terms of P/E and that's around 20, which is still fair valuation to that company in my opinion.

[finwiz.com was used to check P/E and P/B levels]