Post #232 by mechinv on the Macroeconomic Trends and Risks board

Personal Finance Topics / Macroeconomic Trends and Risks ❤

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What about Cyclically Adjusted PE?

There was an excellent study of CAPE and future market returns done by one of the board members here (tedthedog), which he posted at

https://www.shrewdm.com/MB?pid=592241089

Take a look at the Dropbox link within that post for the charts showing CAPE on the x-axis and forward returns on the y axis.

Ted found that during various 10-year periods after 1995, higher CAPE ratios were correlated with low total market returns over the subsequent 10 years, but he was unable to find a correlation in 10-year periods before 1995.

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