Real S&P 500 with CAPE Valuation - Monthly

Chart Description

This chart uses the CAPE stock valuation measure shown in Real S&P 500 CAPE - Monthly to apply colored valuation indicators to the real (inflation adjusted) S&P 500 index shown in Real S&P 500 - Monthly. Times in which CAPE is more than a standard deviation above/below its average are considered over/undervalued, and times in which CAPE is more than two standard deviations above/below its average are considered extremely over/undervalued. This chart shows that CAPE has done a pretty good job historically of identifying major stock market peaks/valleys as over/undervalued. This chart also shows valuation of the current stock market according this measure.

Relevant Links

mccormick-charts.com: Real S&P 500 CAPE - Monthly, Real S&P 500 - Monthly

Wikipedia: cyclically adjusted price-to-earnings ratio

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