The Shiller P/E Is Broken, And You Need To Stop Reasoning In Fiat Terms
The article argues that the Shiller P/E ratio is no longer a reliable valuation metric due to changes in accounting standards and monetary policy. It suggests investors should stop evaluating markets solely in fiat currency terms and consider alternative measures like gold as a benchmark. The author emphasizes that traditional valuation models may be distorted by inflationary pressures and financial engineering.
- ▪The Shiller P/E ratio uses 10-year averaged earnings, but accounting rule changes like mark-to-market can distort its accuracy.
- ▪Recent accounting practices and monetary expansion have inflated corporate earnings, making traditional P/E ratios misleading.
- ▪Viewing the S&P 500 relative to gold shows that equity valuations are not as high as they appear in fiat currency terms.
Opening excerpt (first ~120 words) tap to expand
{"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https://seekingalpha.com/"},{"@type":"ListItem","position":2,"name":"Market Outlook","item":"https://seekingalpha.com/market-outlook"},{"@type":"ListItem","position":3,"name":"Today's Market","item":"https://seekingalpha.com/market-outlook/todays-market"}]}{"@context":"https://schema.org","@type":"NewsArticle","mainEntityOfPage":{"@type":"WebPage","@id":"https://seekingalpha.com/article/4905178-the-shiller-pe-is-broken-and-you-need-to-stop-reasoning-in-fiat-terms"},"author":{"@type":"Person","name":"Geneva…
Excerpt limited to ~120 words for fair-use compliance. The full article is at Seeking Alpha.
Discussion
0 commentsMore from Seeking Alpha
