Shiller PE Ratio

The Shiller PE Ratio, also known as the cyclically adjusted price-to-earnings (CAPE) ratio, is a way to measure if stocks are overvalued or undervalued by comparing the current stock prices to the average earnings over the past 10 years, adjusted for inflation. Unlike standard P/E ratios that look at one year's earnings, the Shiller PE smooths out short-term fluctuations and provides a longer-term perspective. A high Shiller PE suggests stocks may be overpriced, while a low one could indicate they are undervalued, helping investors assess market valuation more comprehensively.