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Can you please expand on that? Do you mean inflated adjusted price?
by silentsea90 10y ago
Can you please expand on that? Do you mean inflated adjusted price?
- cesarbs 10y agoP/E ratio, or, more likely, CAPE. P/E stands for "price to earnings" - it essentially tells you how much you're paying in a share of stock for each dollar in future earnings. P/E is calculated at a point in time - current price over last reported earnings. The CAPE (Cyclically adjusted price-to-earnings) ratio is a better measure because it's calculated based on the last 10-years earnings. It's somewhat predictive of future stock market returns (10 to 17 years out), albeit with wide variation. Right now the American stock market is very expensive. Take a look at http://www.multpl.com/shiller-pe/ http://www.multpl.com/shiller-pe/. Many international markets are not, though: http://www.starcapital.de/research/stockmarketvaluation http://www.starcapital.de/research/stockmarketvaluation. Current American market valuations have most people expecting very little real (inflation-adjusted) returns from the stock market over the next 10 years.
- jasonmclaren 10y agoMore expensive relative to some measure of underlying value like earnings or book value. If you look at the P/E ratio (price-to-earnings) of a stock, a higher ratio means you're paying more to buy enough stock to get $1 of earnings, which in a sense means that the stock is more expensive.
- kcanini 10y ago"Expensive" when referring to stocks typically means some flavor of price/earnings ratio, such as http://www.multpl.com/shiller-pe/ http://www.multpl.com/shiller-pe/