October has been a terrible month for equities. Yet, this is only a start of what’s to come.
The Shiller PE Ratio also known as “CAPE”, the Cyclically Adjusted Price-Earnings Ratio, is in the stratosphere. It’s not a timing mechanism, rather it’s a warning mechanism. The main idea is that earnings are mean reverting. On that basis, stocks are more overvalued than any time other than the DotCom era.
