Should We Forget Shiller CAPE Ratios and Focus on E/P Instead?
Jun 12, 2014
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By Michael Kitces, MSFS, MTAX, CFP, CLU, ChFC
Price-to-earnings (P/E) ratios can be useful in gauging whether a stock or an equity market is expensive, but they are not always intuitive. Investors may be better served with earnings-to-price (E/P) ratios instead, which more clearly show that when stocks have low yields, they tend to produce low returns.