Why you may’t belief the CAPE ratio

What if I informed you that the CAPE ratio ((CAPE stands for the cyclically adjusted price-to-earnings ratio as popularised by Robert Shiller.)) predicted simply 25% of the variation in 10-year returns for the S&P 500. Would you be so fearful about sky-high US valuations?

Proper now the inventory market’s best-known valuation gauge is at boiling level – it’s mercury having climbed into the 99th percentile of historic values.