No one knows what's coming, but as we write, the view looks pretty good. In fact, it's downright amazing. Of course, seeing what looks like near perfection requires a rear-view mirror. If we choose that bias, ours is a golden moment. Let's bask in it, fully aware that it may or may not offer clues for what awaits.

Year to date, through Friday, October 5, Latin America glitters brightest of all if we carve up the planet's equity markets by the familiar labels. Advancing 49% in total return dollar terms is the standard by which most other carvings fall short, as our table below shows. Of course, "falling short" still looks pretty good for the most part in absolute terms. (All numbers throughout are courtesy of S&P/Citigroup Global Equity Indices.)

Meanwhile, the sick man of the equity markets within the developed world this year surely goes to Japan, which has advanced by less than 2% YTD. If this is the best the world's second-largest economy can muster in a stellar investment year such as 2007, one might wonder what's the outlook when times turn tougher?

No, you don't have to answer now. Sleep on it. Meanwhile, consider our second table below, which ranks the equity realm by current dividend yield. By that standard, Europe is tops, standing high with a 3.2% yield. On a relative basis, at least, that's as good as it gets. Alas, poor Japan still looks unpromising with a current yield of just 1.3%.

Moving on to price-earnings ratio, Latin America looks impressive again, offering the least expensive pool of equities, based on this metric's 4.5 p/e, calculated on a trailing 12-month basis. As the third table below shows, there's a wide range of p/e ratios in the world, all the way up to the relatively pricey (yep, you guessed it) Japan, at 20.1

In fact, as our final two tables below advise, Latin America wins the global race on two additional fundamental metrics: return on equity and price to cash flow. The question is whether the strong fundamentals in Latin America offset the risk that comes now that the region's basking in the glow of the bulls? One might want to lean on the side of caution when answering. Consider, for instance, that Latin America's value status via a trailing p/e prism fades quite a bit when looking at the region by way of forward-looking p/e estimates.

In fact, one might ask if the equity markets generally are deserving of new capital, considering that we sit at or near record highs as far as the eye can see. Better to ask the tough questions when times are good rather than waiting to pose such queries when blood runs in the streets.

On that score, one might think of this post as a public service announcement for investors. We now return you to the bull market, already in progress...

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James Picerno

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