January 2018

(Video) Cape Fear: Why CAPE Naysayers Are Wrong

US CAPE ratios are at levels previously reached only in 1929 and during the tech bubble. Should we fear the lofty valuation multiples, or should we fear the CAPE ratio itself, because of its notorious unreliability in picking market peaks and troughs?


CAPE Fear: Why CAPE Naysayers Are Wrong

By Rob Arnott Vitali Kalesnik Jim Masturzo

January 2018 | Read Time: 30 min

Beware the consequences of assuming that elevated CAPE ratios are here to stay, but if they are the “new normal,” low future returns are likely to be the “new normal” as well.