The Shiller PE Ratio Indicates Positive Returns for the Markets

“The Shiller P/E ratio, or the cyclically-adjusted price-earnings ratio, is one of the most popular yet most misused measures of stock market value.

It’s calculated by taking the S&P 500 and dividing it by the average of ten years worth of earnings.  If the ratio is above the long-term average of around 16, the stock market is considered expensive.

Currently, the Shiller P/E is at 24.

While this certainly looks expensive, it would be a mistake to assume that stocks are doomed to crash until the ratio rights itself….”

Full article