Monday, August 22, 2016

What is the CAPE Ratio

Robert Shiller’s CAPE ratio is defined as the price of a share divided by the ten-year moving average of its earnings. Using the ten-year moving average helps us gain long-term perspective and account for inflation. The ratio is used to assess valuations in the Markets.

The ratio currently stands at 26, almost at par with levels seen before the US financial crisis of 2008.