The following is a scatterplot of CAPE using historical data downloaded from Quandl.
This particular PE ratio was invented by Nobel Prize-winning economist Robert Shiller of Yale University.
CAPE uses a rolling ten-year earnings period. This smooths out fluctuations based on temporary psychological, geopolitical, and commodity-linked factors that should not bear on fundamental valuation.
The second feature is that it is backward-looking only. This eliminates the rosy scenario forward-looking earnings projections favored by Wall Street.
The third feature is that relevant data is available back to 1870, which allows for robust historical comparisons.
The plot is produced by R, and will be updated on a quarterly basis.
Note: If you use Chrome, you might need to clear browsing data by pressing Ctrl+Shift+Delete (on Mac the shortcut is: Shift+Command+Delete), and then refresh your screen to see the most updated plot.
In no event shall the author be liable for any direct, indirect, incidental, special, consequential or exemplary damages including damages for loss of revenue, anticipated profits, loss of business, goodwill, or other tangible or intangible losses resulting from the use of any data or information provided in this article.