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  • Understanding the CAPE Ratio: How It Works and Why It Matters

    Understanding the CAPE Ratio: How It Works and Why It Matters

    The Idea Behind the CAPE Ratio The cyclically adjusted price-to-earnings ratio, more commonly called the CAPE ratio or Shiller P/E, is a tool that investors use to assess whether the stock market is running too hot or undervalued. Unlike a standard P/E ratio that only looks at current earnings, this measure smooths things out by…

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