, Columnist
Stocks Aren't as Pricey as This Ratio Suggests
The Shiller P/E ratio is high, but a valuation-based crash is unlikely so long as global earnings continue to grow.
Room to grow.
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In the 1962 thriller "Cape Fear," an ex-convict, Max Cady, stalks the prosecutor who put him behind bars, seeking revenge. The film reaches its nerve-wracking climax on the shores of Cape Fear. In the nick of time, evil is thwarted and justice prevails.
Today, many equity investors are facing their own CAPE fear. Specifically, the S&P500 cyclically adjusted price-to-earnings ratio, known as CAPE, is approaching 30, just shy of its peak before Black Tuesday in October 1929.