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by Mike “Mish” Shedlock
MISH’S Global Economic Trend Analysis
Overvalued No Matter How You Look
Currently, stocks are extremely overvalued by multiple methods.
We will look at both, but here’s a description of CAPE.
CAPE is a valuation measure applied to stock market indexes. It’s defined as price divided by the average of ten years of earnings (Moving average), adjusted for inflation. The essential idea is earnings are mean-reverting making forward looking earnings frequently too optimistic, and current PEs too high following steep corrections.
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