Is a recession imminent?
The only time anyone seems to agree on the answer to that question is when we’re already in a recession (generally defined as two or more consecutive quarters of negative economic growth)
But that hasn’t stopped people from trying to read various economic indicators to determine if a recession is on the way, and a big one just triggered. Here’s what happened, and what investors should do now. Approaching a record high One of the most common tools for assessing a single company’s valuation is the price-to-earnings (P/E) ratio.
In 1988, economist Robert Shiller devised a method to calculate a cyclically adjusted P/E for the entire S&P 500. Dubbed the “Shiller CAPE ratio” (CAPE stands for “cyclically adjusted price-to-earnings”), it has been retroactively computed back to 1871. And that computation contained a big surprise.