The best way to find cheap stocks

The CAPE ratio is a useful tool to finding the cheapest markets to put your money, says Tim Bennett. Here, he explains how it works, and reveals the best-value countries to invest in now.

Investing success can't be reduced to one calculation it's not that simple. But if you were to put a gun to my head and force me to choose one, I'd go with the cyclically adjusted price/earnings ratio (CAPE). I am not alone in this among many others, Mebane Faber, portfolio manager at Cambria Investment Management, likes it too. So what's so good about it?

What is the CAPE?

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.