CAPE ratio

Rising yields are usually unimportant. In sharp contrast, valuations are always crucial. Australian and value stocks abate this major risk.

A recent “analysis” overlooks key facts and ignores major risks. I analyse comprehensively and rigorously, and thus conclude justifiably.

“Forward earnings” and PEs are biased, create unduly upbeat valuations, weaken the quality of earnings – and thus eventually induce losses.

Bulls claim they would, but history contradicts them: when valuations are extended, sharply lower rates crush rather than boost stocks.

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...