Forget the CAPE, Buffet's ratio wins on accuracy

Forget the CAPE, Buffet's ratio wins on accuracy. Stephen E. Jones, president of String Advisors Inc. says that Warren Buffett's favorite ratio - The market value-GDP - is more accurate than the Robert Schiller's CAPE ratio when determining the outlook for US share prices. Shiller's method is flawed because corporate events can affect a specific company's earnings and the broader profit outlook differently. CAPE's ability to predict stock performance appears to be tied to the tendency of longer periods of historical earnings to track GDP. To read more on Buffett's ratio and see the charts on where it stands now visit: (VIEW LINK)

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