The graph above plots Prof Robert Shiller's cyclically adjusted price/earnings ratio or CAPE. Shiller is the bubbleologist who predicted the 1999 stock market bubble using a graph like the one above as well as the 2007 housing bubble. The price/earnings ratio is a measure of the value of a stock, and we see that when it goes above 20, we generally see subsequent declines. However, we have been above this value for the past decade. DISCLAIMER: If I really knew, I wouldn't be teaching school. HT: ZeroHedge.com
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DISCLAIMER: If I really knew, I wouldn't be teaching school.