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 […]