The most well known example of this approach is the Shiller P/E ratio, also known as the CAP/E ratio (cyclically adjusted price earnings ratio). The Shiller PE is calculated by dividing the price ...

As expected, the lower the ratio, the better the returns. But the relationship isn't exactly linear. Here's Garthwaite's chart. At current elevated levels, the Shiller PE is signaling a period of ...

The CAPE ratio, or Shiller PE ratio, is a tool you can use to gain a long-term view of market valuation. By evaluating the ...

The chart below shows the annual P/E ratio versus the inflation-adjusted (REAL) S&P 500 index. Furthermore, valuation swings ...

Another option is to use Yale professor Richard Shiller's p/e ratio, which tries to adjust for swings in profitability. Rather than look at one year's earnings, Shiller averages the last ten.

This graph shows the S&P 500 plotted against the Shiller S&P 500 CAPE PE ratio for the last 125 years. The scale in the lower chart is inverted with high PE ratios at the bottom and low PE ratios ...

Lately, every stock market watcher has been keeping a close eye on the Robert Shiller's cyclically-adjusted ... showing how the P/E ratio predicts returns. And we had scatter diagrams, showing ...