I couldn’t find anything to watch on TV yesterday…kidding, but during that football game I decided to create some alternative charts. I am not certain all of them are useful but they are interesting.
The Orange Line = Robert Shiller’s CAPE or PE10
The Light Blue Line = Is PE10, with the high and low EPS reading removed from all 130+ rolling 10 year periods. It seems to peak later than PE10 and indicates something changed in the late 1990’s.
The Grey Line = CAPE divided by the price of a gram of gold.
The Green Line = CAPE divided by Aggregate Hours Worked with 1964 = 1. Americans are working more for the same PE ratio
The Dark Blue Line = CAPE/PPI with 1913 =1. Americans are paying more for inputs for the same PE ratio.
The Yellow Line = CAPE/CPI with 1914 = 1. Americans are paying more for goods to get the same PE ratio.
The inference I get from wasting my time making these charts is that earnings have underperformed everything since the 1900.
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