Now, if you flip P/E upside down, you’ll get a little less-known metric called earnings yield. Conversely, the lower the P/E, the bigger slice of earnings a dollar can buy—which translates to a higher earnings yield. But soon after, stock prices roared past record highs, and their earnings yield fell to rock-bottom lows, too. It’s the S&P’s average earnings yield over the past 10 years minus the real yield (adjusted for inflation) on 10-year Treasuries. The only other time excess CAPE yield was this high globally was in the early 1980s.

Source: Forbes December 28, 2020 16:52 UTC