Jefferies On A Few Reasons CAPE Ratio Is Severely Flawed

Jefferies strategists Sean Darby, Kenneth Chan and Vivien Hu present their views on the current valuation of the U.S. markets in their study ‘Global Equity Strategy US – No Line on the Horizon’ of October 30.

The Shiller CAPE Ratio

One of the valuation methods, the Shiller CAPE Ratio, has been in the limelight recently because it is currently ruling at 24x for the S&P 500, said to be a high valuation. (Also read here why the CABM Ratio could be superior to the CAPE Ratio).

CAPE Ratio may suffer

The Jefferies analysts say, “Investors should be careful relying solely on one valuation model...