Caped Crusaders Say Wall Street Still Overvalued

FEW measures of stockmarket valuation are as controversial as the cyclically adjusted price-earnings ratio, or CAPE. American equities have looked expensive on this measure for most of the past 20 years, which is why many bulls tend to dismiss its usefulness. It is pretty clear that the CAPE does not help investors to time the market. But a new paper* from Research Affiliates, a fund-management group, explains why many criticisms are overblown.