CAPE ratio

The current market’s valuation is among the top 3% of most expensive markets since 1881. Should investors be nervous?

Their earnings have sunk since the GFC, yet even weaker bases underpin the S&P 500’s returns. Aussie stocks thus offer better prospects.

One of our preferred market valuation indicators is the CAPE model derived from macroeconomic fundamentals. The basic idea is that lower levels of interest rates...