cyclic

Some metrics point to a prolonged fall—economist Robert Shiller’s version of the cyclically adjusted price-to-earnings ratio recently breached 40 for the first time since 1999.

Rather than the forward-looking price/earnings ratio based on analyst forecasts and favored by most fund managers, that is the cyclically adjusted version first proposed by Warren Buffett’s mentor Benjamin Graham.

For one, the cyclically adjusted price-to-earnings ratio, also known as the Shiller P/E ratio — a widely watched long-term valuation measure — rose above two standard deviations from its historical average in the summer of 2024.

Zillow’s earnings profile is cyclically depressed because of the housing market.

Years ago, Robert Shiller developed his cyclically adjusted P/E, or CAPE, ratio for the S&P 500....