Gold Will Outperform Stocks, Bonds, And Real Estate

MyPlanIQ submits: Yale Professor Robert Shiller has devised and maintained his Cyclically Adjusted Price Earning ratio (CAPE10) as an alternative to the P/E ratio to value the U.S. stock market.CAPE10 is defined as the ratio of price to the average of the last 10-year trailing S&P 500 annual earnings.

By CFA Institute Contributors: By David Larrabee, CFA

Insider Monkey submits: The most common way to determine if stock market returns are overpriced or cheap is to use P/E ratios. The two schools of thought include that of permabulls, who argue that the stock market is cheap because of both the trailing 12-month P/E ratio and 2011 earnings estimates; and Permabears, who argue that the stock market is expensive because of a high Shiller’s P/E Ratio.

Now that the stock market is hitting new highs, everyone's suddenly excited about buying stocks again. Meanwhile, four years ago, when stocks were at a decade low, no one wanted to have anything to do with them. It is ever thus.

Yale professor Robert Shiller was one of a relative handful of stock-market observers who warned that the bull market of the late 1990s was a colossal bubble in the making. Shiller's book, Irrational Exuberance, was published moments before the 2000 top, and it foretold much of the carnage that was to come.

MyPlanIQ submits:Yale Professor Robert Shiller’s Cyclically Adjusted Price Earning Ratio (CAPE10) was reviewed October 2009. CAPE10 is defined as the ratio of price to the average of last 10 year trailing S&P 500 annual earnings.

ByBren O'Boyle:There has been much debate in recent months as to the attractiveness of US equities in terms of valuation. Much of this debate has hinged upon comparison of price to earnings, risk premium or cyclically adjusted price to earnings (CAPE), relative to historically average valuations.

Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.The interim solving of the debt crisis in Greece has restored calm in the markets, with the CBOE S&P 500 Volatility Index (VIX) settling at 17.3 compared to its long-term average of 20.0.