Practical analysis for investment professionals

cyclically-adjusted P/E

The Vagaries of Using CAPE to Forecast Returns

Historically the CAPE ratio has worked well in predicting the future real returns of stock markets. But recently the earnings side of the CAPE ratio has come under increased scrutiny.

Jeremy Siegel: Stocks Are the Most Stable Asset Class in the Long Run

Stocks are the most volatile asset class in the short run — but the most stable asset class in the long run, according to Jeremy J. Siegel. The Wharton professor also warns that the CAPE ratio's pessimistic predictions are based on biased data.

Asness: Shiller P/E is Signaling Risk of Another Lost Decade for US Stocks

With the Shiller P/E for the S&P 500 currently standing at a 21.5 (approximately 30% higher than its long-term average), many value investors, including Cliff Asness of AQR Capital Management, have adopted a cautious stance toward US stocks.

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