Module VIII·Article IV·~1 min read
Shiller CAPE
Global Equities (Developed Markets)
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Cyclically Adjusted P/E (CAPE, Shiller P/E) — the ratio of price to average earnings over 10 years, adjusted for inflation.
Interpretation of CAPE
| Value | Market Assessment |
|---|---|
| < 15 | Market is cheap (rarely) |
| 15-20 | Fair valuation |
| 20-25 | Moderately expensive |
| > 30 | Bubble (1929, 2000, 2021) |
Application
CAPE predicts long-term returns (10 years), not short-term ones.
High CAPE = low expected return.
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Global Equities (Developed Markets)
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