The Beauty Of The CAPE, The Shiller PE Ratio

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Information The Beauty Of The CAPE, The Shiller PE Ratio

Title	:	The Beauty Of The CAPE, The Shiller PE Ratio
Lasting	:	5.07
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The biggest problem with Shillers PE is that GAAP accounting standards have had few key changes since the year 2000 For example Goodwill Impairment Rule, Mark-to-Market Accounting and so on So now CAPE can be overly pessimistic when trying to derive the total return over the next 10 years
Comment from : @DanilZhmutskyy

You cannot look at the last 150 years and come up with a mean/median CAPE ratio Market constituents were way different 100 years ago than it is now Ever since tech boom in the 90s, Shiller PE ratio is higher because tech companies can grwo their earnings faster Since 1990 median Shiller PE is around 25 By that standard, market is still above fair price, but not egregiously overvalued Furthermore, there are more market participants now than there were 100 years ago People can now go on google and pull up minute by minute chart instead of taking a peek at the stock market once a day 100 years ago 401k means more money going into the stock market There are multiple factors to look into the Shiller PE than just last 150 years of data
Comment from : @barryallen6927

I think Shiller pe doesn’t make sense to analyze “the market” because the index are made in big part by the Magnificent 7 that grew a lot in recent years it make no sense to take into account how much money apple, meta , google , nvidia, tesla , Microsoft etc were making 10 years ago is not a reflection of what they will do in the future
Comment from : @Retiredat33

Nothing will happen Sven, you always so gloom with the view, the potential of AI is huge and you are hurt because you’ve missed all those 100 gains This time it is differentbrbrOn a serious note, I’m worried with sky high PE but at the same time some company really do make high growth in cash flow to justify its valuation Will it goes up more I don’t know Will it fall, probably, but one thing for certain is US treasury 4 plus makes finding attractive stock to invest much more rare
Comment from : @thanajiraratana3161

Thank you sir
Comment from : @faronskelton4085

I like when you crossed out the Wall Street earnings projection and used real data instead
Comment from : @tradingfundamentals

I think that PE ratios, especially CAPE, is amazing for analyzing markets, but not that great for individual stocks:)
Comment from : @mikkelhansen3714

Sheila p/e ratio? 🧐
Comment from : @ironmantooltime

Sven could You do a video on your thoughts about Uber or Target? Thanks for your work :)
Comment from : @agustinlozano6392

This video is on point
Comment from : @marvulishious

19 November 2012 brAsness: Shiller P/E is Signaling Risk of Another Lost Decade for US Stocks brBy David Larrabee, CFAbrAsness notes that the Shiller P/E is currently higher than 80 of the time since 1926 He examined S&P 500 Index real returns over rolling decades since 1926 and sorted the data into deciles by starting Shiller P/E ratios Asness found that at current valuation levels, the average expected real stock market return over the next decade is a sobering 09 per year
Comment from : @ChihiroSpritedAway

You are the most dedicated elf; thank-you for your work!
Comment from : @johnmcquaid7524

“It doesn’t work” 😂 brbrTypical Bull market delusions “It’s different this time ! “ 😂
Comment from : @Garybroker54

Reverse repo drops below $100B, lowest since 2021 Signals tightening liquidity as institutions pull cash from the Fed Could hint at funding stress or market shifts, raising risks of a repo crisis Fed may face pressure to ease despite rate hike plans What do you think about that? Means QE continuing and stonks go up!
Comment from : @Denment93

Sven, The historical trend line for the Buffet indicator is a curved line Is it a statistically best fit quadratic? Do you know how the standard deviation is calculated for this line? Just trying to understand the mathematics behind this
Comment from : @sjsnopek

Cheers Sven, for this Great value as always
Comment from : @siggiAg86

Warren Buffett lost his sharehodlers around $1T by holding cash and short term treasuries while waitning for crash which never happens If he invested all his cash into SPY, he would made multiple times more money than holding treasuries even if he bought at 2000 top QQQ return since 2000 top is now double digit annualy and he wa buying 1 treasuries What a shame
Comment from : @PavolKosik-b3u

Its interesting that your graph shows Shiller PE of S&P 500 going back centuries while index itself was created in year 1957 Since 1957 with real data its almost al lthe time above imaginatory median with only small dip below it in 80s brbrHalf of it is fake and other half shows that real median is much higher your entire lifebrbrStocks tracks adjusted PE 19 past few decades and always returned to this PE withing 1 to 3 years with only one exception and that was after 2011 when it took 5 years Thats the real PE anyone should look for because stocks follow and mean revert to this PE all the time Dozens times in past 20 years
Comment from : @PavolKosik-b3u

Thanks Sven ✔️
Comment from : @noelflores4389

GAAP earnings are real so Sven Carlin thinks that British American Tobacco lost money from their operations this year because of non cash write off of book value? Are you even serious? GAAP earnings are not real earnings and thats why companies adjust them to show real operating earnings without non cash wrtie offs of book value and other impairmentsbrbrIf your house will go down $10k in value this year would be your salary $10k less? No But GAAP says it is Stocks track oeprating earnings and only amateurs dont know that Thats why EPS charts going back to 1933 are using adjusted EPS to show correlation between adjusted EPS and share prices
Comment from : @PavolKosik-b3u

"Shiller PE is signaling risk of another lost decade for US stocks" Article title from 2012 my friends CAPE ratio is terrible valuation tool Stocks were 30 overvalued in 2012 using Shiller PE but at 30 year low operating PE Go and figure out returns since 2012brbrShiller PE uses GAAP earnings which are not real earnings Companies made a lot of book value write offs after 2008 financial crisis to adjust for lower value of assets that time so GAAP EPS was much lower than real profits of companies called operating Earnings of companies are growing majority of years so using 10 year EPS to calculate PE ratio is nonsence It will always look much higher than it is Always use actuall operating earnings and calculate PE from it Thats how market is doing it
Comment from : @PavolKosik-b3u

No one is asking, AFTER the Crash when many are on the streets like in china now WHAT happens to the massive growing Govt Debt???? That will still be there and in fact with recession , less jobs and incomming taxes so the US Govt and others MAY CRASH The SM, HM crashes are obvious, but what about AFTER?????
Comment from : @xx3868

Now it's not about the P/E ratio, it's about the price to future funding ratio lmao!
Comment from : @happyfunnyfoo

Humans NEVER change!! This time is diff, My God is the real one (mine is obviously the real one) and Eskimos are real!! Humans are so dumb and repeat their mistakes over and over!! Geez people are gullible We warn them thats its ALL in a bubble but it feels good just before the crash and why 998 are sucked in and lose everything Just look at china now and housing and people crying World meltdown has started Anyway i need to take a call from a Nigerian about an exciting investment offer he has now if i just wire him a small admin fee!! Stupid humans!!!
Comment from : @xx3868

Ahahah oprosti Slobo 🤣🤣🤣
Comment from : @truncksZR

Money printing hasn’t significantly increased margins The rise of tech stocks has increased average margins in the S&P500
Comment from : @s76378

Whilst not value investing, could you explain the strategy Microstrategy is using with Bitcoin and the risk they pose to both their own shareholders and the Bitcoin price as a whole I think it could be quite educational
Comment from : @davidbumpstead9833

tldr just buy index funds and keep 20 in cash for a crash yeah its overvalued but not being in the market is worse than watching it zoom past you
Comment from : @MasamuneX

I am at the beginning of my "investment journey", planning to put $85,000 into dividend stocks so that I will be making up to 30 per year in dividend returns Any advice?
Comment from : @ImaneDupont

I've always been fascinated by investing, but when I tried stock investing early this year, it hasn't been as successful as I expected However, I keep seeing good news about the stock market What are the best strategies for less risk and more gains?
Comment from : @MilaCruz-d5r

👍
Comment from : @Nemi51500515

It’s important to note that Warren Buffett continues to maintain a substantial portfolio of US stocks, reflecting his deep confidence in the long-term prospects of American companies
Comment from : @eweng903

Insiders selling to the shoe shine boy for 1 year now Market is now running out of fuel No investor would buy at such CAPE while money conditions keep tightening, tarrifs are implemented, factory orders drop, delinquencies are on the way up, layoffs just started and AI gurus forge the financial statements to show enormous profits Tulipmania 😂
Comment from : @WallSt-o1q

"People" ready to pay any prices My guess is buybacks / Ai crazy / and BlackRock and Co just need some sources to "park" their assets based on "the market has historically brought 10 " and anyways they just extended the horizon from 10y /20y for an average investor to 40-50 yrs They will be there anyway
Comment from : @catalin357

Howard marks described the US market expencive, Not overvalued
Comment from : @Fath-gx9mk

We went from buy the rumours sell the news to buy the rumours and buy the news, never ending highs will end when the music stops playing
Comment from : @Fath-gx9mk

Yep, CAPE is widely known for its superior ability to predict long term real returns In am article some years ago, Prof Shiler I think proposed the CAPE excess yield as more comprehend measure of stock market attractiveness Excess yield is simple defined as the the inverse CAPE compared to 10 year real bond yields
Comment from : @nickdinenis9883

I dont think we need a CAPE-ratio to tell that stocks in the US are expensive The question is why are they expensive and is that "why" "wrong" and therefore in the future they are not that expensive It is way too one level thinking to look at something to be expensive and therefore to go down You don't go to Lexus -dealership with this logic and you should not go stock market either
Comment from : @potomacXX

it doesn't matter If someone fully invested in stocks at the highest point right before 2008 he or she would still made lots of money Especially now the fed has QE as a regular tool they could influence rates at the long end in a heartbeat so the market PE at 100? no problem, 10 year treasure 01 short term rate at 0, borrow as much as you want 😂
Comment from : @definitelyno601

I want to get rich, if it can crash and I get a higher paying job and keep it Jesus will I buy like a maniac There will be minimal lifestyle creep during the accumulation phase
Comment from : @Cleisthenes607

The point you're missing is that all this legacy investing advice and way of interpreting data does not hold anymore do to an exponential explosion globally in acces for retail traders to trade frictionlessely The numbers the last 20 years for people with compute in their pocket and platforms is mindnumbing Also real estate is our of reach for a large majority of people looking to invest so retail stocks will be overvalued pretty much indefinitely with old standards They need to be adjusted Also tax hikes make people more reluctant to cash out
Comment from : @churde

In case you are wondering Sven is always bearishbrbrIt can be the bottom of a bear market and he'll be telling you how the buffet indicator is too high
Comment from : @US_stocks_bro

Hey sven, i was thinking about your 2nd book, it is still work in progress?
Comment from : @sapoc98

Sven trying to help the little guy from getting his face ripped off yet again…
Comment from : @abvincent12

I don't like dragging cryptocurrencies into the discussion, but IMO those are helpful in gauging the relative level of speculation in the markets I see that asset class as the most speculative, and prices are currently at their highs When combined with the Schiller and Buffett indicators, it's obvious to me we're topping out The last ingredient needed for a major selloff is an event(s), and old timers will tell you that once these indicators reach such high levels, some type of event "miraculously appears" and suddenly we find ourselves in a bear market IMO, it's a good time to be mostly in cash and simply observe, assured the show is close at hand
Comment from : @jlvandat69

saying that buffet doesnt understand what hes doing is as ridiculous as these valuations youre pointing at branother good video mate
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