Comments
DesmondMilesDant OP t1_jefdjua wrote
Yah i totally forgot we have a new bull market so who cares about valuations and what regime we are in. It doesnt matter! 😂
grimkhor t1_jeffhez wrote
I gave you the reason you asked for. This is not about bull markets or not. It's about that Shiller PE doesn't weight the current valuation very high. If todays market would drop to 0 and no change in inflation so a PE of 0 the Shiller PE would drop from 29 to 26 that's how much a year worth of PE is weighted.
DesmondMilesDant OP t1_jefgeob wrote
Yah sorry i forgot to thank you for that. 😅 Thank you again sir. Have a great April 2023. 😉
VisualMod t1_jeeui1f wrote
DesmondMilesDant: % SHILLER_PE_RATIO_MONTH 1M MULTPL QUANDL = 28.70 -0.14 (-0.49%) point 28. .70 0
You're an idiot if you think that a single data point is indicative of anything.
TOOHIGH_96 t1_jeevo94 wrote
Shiller declared his own PE ratio as not practical in the past years bcs of the interest rates. Read the interview from 2020
DesmondMilesDant OP t1_jeew92h wrote
But interest rates were 0% at that time. I doubt he would have ever thought that we would be here at 5% in 2023.
honkballs t1_jefyv39 wrote
Earnings have gone up quite a lot over the last 10 years and as the Shiller PE takes an average of the last 10 years earnings, it will mean it's using a lower average earnings than todays earnings for it calculation.
Combine that with todays prices not actually being very cheap, it's resulting in a high Shiller PE. As long as earnings remain the same (or increase) even if stock prices don't go up the Shiller PE will start to come down over the next few years.
VisualMod t1_jeeuhf1 wrote
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[deleted] t1_jef19gz wrote
[removed]
PharmDinvestor t1_jef658s wrote
There is a new generation of investor who are dip buyers …. And the shiller PE ratio will only make sense if they incorporate dip Buyers into formulating new PE.
ps …. all financial stock metrics should be reevaluated to include dip buyers .
grimkhor t1_jef3z0n wrote
Shiller PE uses a 10 year trailing PE so when stocks drop in PE it only has a 1/10th influence on their PE but inflation is build in directly so the Shiller PE is high. That's why the Shiller PE is terrible to use for current valuation. It can be used for long term (decades) prediction of future returns e.g. the next 10y market returns might be lower than the last (no need to be negative btw). This can also happen even further in the future so that's why Shiller PE is only useful if you think in decades but as you regards already forgot the beginning of the comment it doesn't really matter