"An above average CAPE is not bad, if one expects that earnings will be improving in the near future. That is, stock prices may be high in anticipation of higher corporate earnings and, consequently, the CAPE will fall as these earnings catch up with the higher stock prices. This is the "good" scenario.
The "not-so-good" scenario is when stock prices increase, yet, earnings do not rise to support the higher stock prices. The question is…is this situation we are now in?"
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The "not-so-good" scenario is when stock prices increase, yet, earnings do not rise to support the higher stock prices. The question is…is this situation we are now in?"
Click here to read the full article