Those with time and inclination might be able to tell us mortals what this all means.

Those without the time might as well ask your friendly AI ;-)

The classic CAPE (Shiller P/E) evaluates the stock market using unadjusted earnings from the past 10 years and has consistently warned of overvaluation since the 1990s. The CAPE-H by Dino Palazzo (2026) adjusts this metric for modern accounting factors, fundamentally changing the signal for today's market.
The key differences at a glance:
- Treatment of R&D Expenses: The classic CAPE treats Research and Development costs as an immediate expense that reduces earnings. CAPE-H capitalizes R&D as a long-term investment, which increases the reported earnings of modern companies and lowers the P/E ratio.
- Handling of One-Off Items: The traditional model includes all one-time write-offs (e.g., during crises), which artificially distorts the 10-year earnings base. CAPE-H eliminates these transitory shocks to reflect true, recurring earning power.
- Current Market Assessment (2026): While the classic CAPE signals a historically extreme speculative bubble with a value above 40, CAPE-H classifies the exact same market as moderately/fairly valued.

That's the gist of the paper, but you can dig deeper and discuss every question with the AI, it's really amazing.