The U.S. market’s CAPE is now the world’s highest and this gives stock investors little cover

MarketWatch/Mark Hulbert/5-8-2021

“The CAPE [Cycically Adjusted Price Earnings ratio] currently stands at 36.6 for the S&P 500 SPX, -0.12%, according to Shiller’s latest calculations. That’s higher than 98% of monthly readings since 1881, and more than double the 140-year average, suggesting an extremely overvalued market.”

USAGOLD note:  Hulbert goes on to say that that the comeback to the overvaluation charge (with which he disagrees) is that the world has changed. In a certain sense, that claim carries some validity. If stocks become assets that are being pushed higher simply based on monetary inflation rather than standard methods of valuation, then they can rise without any connection to earnings. That said, Hulbert says: “Dismiss CAPE at your peril.”