Interesting take on Shiller’s cyclically adjusted price earnings ratio (CAPE).
The analysis argues that one should be using today’s tax rate and adjusting for buybacks.
This leads to a CAPE 2.0 of 28x – far below the current CAPE of 38x and nowhere near the Dotcom peak.
This is the “basic” version and for those interested there is a more advanced (and more controversial) version that results in “the last 20 years go from being an expensive aberration to a typical investment period“.
