The Shiller CAPE (Cyclically Adjusted Price Earning) Ratio assesses the valuation of stocks in the context of their inflation-adjusted price-earning ratios as averaged over the long term, i.e. ten years.
(Read more about the ratio here and here)
The S&P 500 is over-extended by this measure
Applying Shiller’s Cape Ratio to the S&P 500 yields a value of 26, very high in the historical context and possibly indicating that the market is overbought and therefore vulnerable to a correction or slower returns in the future.
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