The Economist’s Buttonwood has a nice chart from Robert Schiller showing cyclically-adjusted price-earnings ratio:
“There is a drawback. What is “cheap” or “dear” is defined by reference to the full history of prices. But an investor active in any period could not have known this in advance. Nor is it obvious at the time whether the cape is close to a peak or trough. Without the benefit of hindsight, timing produces disappointing results.”
The subtitle is interesting too: “The perils of trying to time the market”
Do read the whole thing, here …
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