Hi everyone. Just thought I’d share some articles with you again. I don’t tend to talk much about valuation methods, other than my brief overviews at the beginning of various monthly dividend updates. However, this article about CAPE (cyclically-adjusted PE) caught my eye in particular.
Ken Fisher thinks CAPE is useless. I do lean towards his opinion. I think CAPE is too defensive a valuation tool because it doesn’t take several factors into account, which you will learn about in his article.
What I do instead
I tend to look at the standard PE, as well as years of dividend growth, payout ratio/dividend cover, even when the shares go ex-div and when dividends are due to be paid. Then I factor in other things such as the economic cycle, political announcements (e.g. a new focus on infrastructure, house building, etc.).
Anyway, check out the article and let me know what you think by leaving a comment or tweeting me. Is Ken Fisher right about CAPE?
P.S. I am not an owner of the stocks Ken recommends and I am not recommending either of them.