Understanding the CAPE Ratio- Insights into Stock Valuation
The <strong>Cyclically Adjusted Price-to-Earnings (CAPE)</strong> ratio, often referred to as the <strong>Shiller P/E ratio</strong> after Yale University professor Robert Shiller who popularized it, serves as a cornerstone in the field of equity valuation. By smoothing out the progressions of earnings over a decade, the CAPE ratio presents a more stable valuation metric for long-term investors and analysts. This article delves into what the CAPE ratio is, how it functions, its applications, limitations, and more....