Is the Shiller PE ratio accurate?
Is the Shiller PE ratio accurate?
We have used Deep Alpha to test Shiller-PE’s accuracy at predicting bear markets. The test has been performed on data going back to 1928, and it turns out that Shiller-PE has been consistently good at predicting bear markets.
How do you use Shiller PE ratio?
How Is the Shiller PE Calculated?
- Use the annual earnings of the S&P 500 companies over the past 10 years.
- Adjust the past earnings for inflation using CPI; past earnings are adjusted to today’s dollars.
- Average the adjusted values for E10.
- The Shiller PE equals the ratio of the price of the S&P 500 index over E10.
What is the PE ratio of the FTSE 250?
FTSE 250 PE ratio = 22.57. Average CPI index for 2019 = 107.8.
What is the Shiller P E10 ratio?
The cyclically adjusted price-to-earnings ratio, commonly known as CAPE, Shiller P/E, or P/E 10 ratio, is a valuation measure usually applied to the US S&P 500 equity market. It is defined as price divided by the average of ten years of earnings (moving average), adjusted for inflation.
What is current P E ratio of stock market?
The P/E ratio is a classic measure of any security’s value, indicating how many years of profits (at the current rate) it takes to recoup an investment in the stock. The current S&P500 10-year P/E Ratio is 38.7.
What is current PE ratio of stock market?
Is FTSE 100 better than FTSE 250?
FTSE 250. Companies in the FTSE 250 are usually more domestically focused than the FTSE 100, meaning they carry out more of their business in the UK than abroad. For that reason, this index is considered a better indication of the health of the UK economy versus the FTSE 100.
What is the Shiller PE ratio for the S & P 500?
Please enable JavaScript to view the chart. Shiller PE ratio for the S&P 500. Price earnings ratio is based on average inflation-adjusted earnings from the previous 10 years, known as the Cyclically Adjusted PE Ratio (CAPE Ratio), Shiller PE Ratio, or PE 10 — FAQ . Data courtesy of Robert Shiller from his book, Irrational Exuberance .
What is the future return of the Shiller P / E ratio?
From this we will estimate that at the Shiller P/E’s current level, the future market return will be around -2.1% a year. This is the historical implied return, actual return and long term interest. Interest rate does have an impact on the market returns.
What is the CAPE ratio of the FTSE 100?
FTSE 100 CAPE = 7542 / 485 = 15.6 So the CAPE ratio at the start of the year was 15.6, but this doesn’t really tell us very much unless we compare it to CAPE’s long-term average. If CAPE is currently below average, then its probably cheap, although how cheap depends on how far it is below average.
What should the FTSE 100 be valued at in 2030?
The extreme ends of that range suggest we could see: The FTSE 100 fall as low as 5,950 in 2030 (this would be a depression valuation) The FTSE 100 climb as high as 23,800 in 2030 (this would be a bubble valuation) Both these outcomes are extremely unlikely, but not impossible, and which one is better depends on your point of view.
