CAPE – Peering Into The Future

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The usefulness of CAPE as a valuation metric for broader markets has become a religious argument.  CAPE clearly cannot be used to market time (what can?) and this time could always be different, but this EconompicData chart illustrates what we consider a fundamental “law” of finance – price and returns are inversely related.  That is, the higher the valuation of an asset, the lower the expected return should be for that asset (and vice versa).

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Article by Cook & Bynum

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