What Can Shiller’s CAPE Ratio Tell Us About Future Stock Returns?


How can you tell if stocks are expensive?

Of course there is a thousand different ratios, indicators and indexes that attempt to measure the value in today’s stock market. Today we are going to look at one of the most popular ratios in particular, Shiller’s PE10 ratio, also known as CAPE ratio. What information can we get from looking at 100+ years of history between stock returns, treasury yields and CAPE ratio readings? [continue reading…]