State Of The Market

The CAPE ratio measures the price of stocks divided by the average of ten years of earnings (moving average) and adjusts that for inflation. A high CAPE ratio often results in low returns in the subsequent decade.¬†Only the 1999 tech bubble exceeded the current CAPE ratio by much. The GDP to Total Market Ratio is another valuation measure, aka the Buffett indicator, that is at a very high level. The Wilshire Total Market, containing 5000 stocks, serves as a proxy for Total Market. The Wilshire’s total market value is exceeding GDP. Previously total market value exceeded GDP in the late […]