*Where has all the value gone?*
We recently raised our long-term price targets for the market, expecting
a lower ERP and better growth to boost stock prices. However, we often hear that investors struggle to find value at the stock level given that so much that was value has risen sharply in the last year or two. In early 2013, 21% of stocks in the STOXX Europe traded below 10x 12m forward P/E; now just over 7% do. We find that dispersion of valuation between stocks has narrowed, mirroring a similar narrowing in dispersion in European bond markets.