Research Affiliates unveils CC-CAPE ratio showing U.S. stocks less overvalued
Updated
Updated · MarketWatch · Apr 28
Research Affiliates unveils CC-CAPE ratio showing U.S. stocks less overvalued
5 articles · Updated · MarketWatch · Apr 28
The CC-CAPE ratio is higher than 87% of historical readings, compared to 97% for the original CAPE, and predicts a 1.0% annualized real return through 2036.
Unlike the original CAPE, CC-CAPE only includes current S&P 500 constituents, offering superior forecasting ability with a 36% r-squared since 1964 versus 26% for the original.
While the U.S. stock market remains overvalued, the new indicator suggests comparisons to the 1999 internet bubble are overstated, providing investors a more nuanced perspective on market valuations.
Is the new CAPE a reliable guide or does it dangerously downplay market risk?
Are traditional valuation metrics like CAPE becoming obsolete in the age of AI?
If US stocks are overvalued, which international markets offer the best opportunities now?
What risk does the $5.6 trillion mega-cap premium pose to the wider economy?
How does the new tech 'diversification premium' change corporate merger strategies?