Nobel Laureate Robert Shiller's long-term stock market indicator points to a recent peak.

Apple Boston

2018-09-17 12:40:00 Mon ET

Nobel Laureate Robert Shiller's long-term stock market indicator points to a recent peak. His cyclically-adjusted P/E ratio (or CAPE) accounts for long-term corporate profitability and market valuation. CAPE has correctly helped anticipate the Black Monday 1987 stock market crash, the dotcom bubble collapse in the dawn of the new millennium, and the global financial crisis from 2008 to 2009.

As of September 2018, this metric gauges the U.S. stock market value at 33 times the average corporate income over the past decade. CAPE serves as a useful key economic indicator of U.S. stock market overvaluation at this stage of the business cycle. In fact, the current U.S. stock market capitalization well exceeds American real GDP economic output. It is often difficult to beat the market, whereas, it can be quite easy and imperative to save on capital income taxes and transaction costs.

Wharton finance professor Jeremy Siegel, however, disagrees with this simplistic CAPE analysis of U.S. stock market valuation. Even though U.S. stocks appear to be expensive, they remain good bargains in comparison with bonds in light of the small default risk premium. Relative valuation of stocks-versus-bonds continues to be favorable during the current Trump stock market rally in modern U.S. economic history.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fundamental analysis of Uber Technologies (U.S. stock symbol: $UBER).

Daphne Basel

2025-10-10 12:31:00 Friday ET

Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fundamental analysis of Uber Technologies (U.S. stock symbol: $UBER).

Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fund

+See More

AYA finbuzz podcast offers fresh insights into the latest stock market topics, economic trends, and personal finance inspirations as of October 2019.

Daphne Basel

2019-10-31 13:38:00 Thursday ET

AYA finbuzz podcast offers fresh insights into the latest stock market topics, economic trends, and personal finance inspirations as of October 2019.

  AYA Analytica finbuzz podcast channel on YouTube October 2019 In this podcast, we discuss several topical issues as of October 2019: (1)

+See More

The semiconductor microchip demand-supply imbalance remains severe for American big tech.

Amy Hamilton

2022-05-30 09:32:00 Monday ET

The semiconductor microchip demand-supply imbalance remains severe for American big tech.

The new semiconductor microchip demand-supply imbalance remains quite severe for the U.S. tech and auto industries.  Our current fundamental macro a

+See More

Blue-ocean strategists shift focus from current competitors to alternative non-customers with new market space.

Apple Boston

2020-05-21 11:30:00 Thursday ET

Blue-ocean strategists shift focus from current competitors to alternative non-customers with new market space.

Most blue-ocean strategists shift fundamental focus from current competitors to alternative non-customers with new market space. W. Chan Kim and Renee Ma

+See More

Allianz chairman Mohamed El-Erian bolsters a new American economic paradigm in lieu of the Washington consensus.

Apple Boston

2018-04-20 10:38:00 Friday ET

Allianz chairman Mohamed El-Erian bolsters a new American economic paradigm in lieu of the Washington consensus.

Allianz chairman Mohamed El-Erian bolsters a new American economic paradigm in lieu of the Washington consensus. The latter dominates the old school of thou

+See More

U.S. fiscal budget deficit hits $1 trillion or the highest level in 7 years.

Monica McNeil

2019-10-25 07:49:00 Friday ET

U.S. fiscal budget deficit hits $1 trillion or the highest level in 7 years.

U.S. fiscal budget deficit hits $1 trillion or the highest level in 7 years. The current U.S. Treasury fiscal budget deficit rises from $779 billion to $1.0

+See More