Just a reminder…

In case anyone is heavily invested in the market, this might be a good time to start and lighten up a little. In case you don’t know it, CAPE (cyclically-adjusted price-to-earning) is NOT a trading indicator in any way. But what it is, historically, is one of the best ways of determing whether a market is particularly expensive or cheap. It is one of (if not THE) best indicators of long-term, 5 to 10 years, returns in the stock market. Timing is impossible to determine, but what it’s saying at the moment is that your average expected return from the next few years is about zero. That’s if you survive one or two very nasty big drawdowns (that would be big losses). All indicators are flawed, obviously, but if you are a passive investor, you might wanna have a think.
And R. Shiller is not a bad economist – he just won the Nobel prize, so I suspect his data is OK.

Just saying…


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