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John Authers

Investors Risk Being Shipwrecked on Shiller's Cape

Stocks can still outperform bonds if both decline.

It’s important to understand the currents.

It’s important to understand the currents.

Photographer: Brendon Thorne/Getty Images


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We need to journey back to the Cape. I don’t mean Cape Horn or the Cape of Good Hope, or even Cape Cod, but merely the treacherous quantitative waters of the cyclically adjusted price-earnings multiple. For those who didn’t read last Thursday’s Points of Return, it might be best to go there quickly now, as it sparked an impassioned response.