What is the Shiller p/e or CAPE ratio?

In this video, Ed Bowsher looks at how the Shiller p/e ratio works (also known as the cyclically adjusted p/e or Cape ratio), and when it can be most useful in determining value.

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The price/earnings ratio is probably the most widely used valuation ratio in investment, but it does have many flaws.

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Ed Bowsher
Ed Bowsher

Ed has been a private investor since the mid-90s and has worked as a financial journalist since 2000. He's been employed by several investment websites including Citywire, breakingviews and The Motley Fool, where he was UK editor.

 

Ed mainly invests in technology shares, pharmaceuticals and smaller companies. He's also a big fan of investment trusts.

 

Away from work, Ed is a keen theatre goer and loves all things Canadian.

 

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