We've seen that the PE10 can be used to loosely forecast long-term (e.g. 10 years) market returns in the US. But what about internationally? It turns out that this intuitive (to value investors, at least) concept does indeed extend out to international markets. Greenbackd highlights two studies that demonstrate this empirically.
Incidentally, current PE10 levels in Canada and the US currently suggest sub par (though still positive) returns over the next five years, according to the authors of one the papers. The market with the largest potential? The much maligned Greece, of course. That country's stock market trades at such a large discount to its historical earnings (which is the basis of the PE10) that the authors' model predicts a 95% cumulative return over the next 5 years.