CAPE is up so markets will go down? Shock horror: it’s not so simple…
Browsing: P/E
As long as you’re not talking nose-bleedingly stupidly high P/E ratios, a higher P/E ratio for the market is no reason to fear lower returns.
Contrary to what some of its adherents imply, PE10 will not see you dive effortlessly in and out of the market like a seagull stealing chips. But it’s a useful tool nonetheless.
Analysts, journalists and private investors often talk about the market being cheap or expensive on a P/E basis. What do they mean?
