This episode offer a comprehensive overview of the Shiller PE ratio, a key metric for valuing the stock market over the long term. They begin by tracing its intellectual origins from Graham and Dodd's concept of smoothed earnings to Robert Shiller and John Campbell's formal application to the S&P 500, explaining its calculation and primary advantage in reducing earnings volatility for a clearer valuation picture. The text then presents the ratio's historical record of predicting market declines, citing examples from the 1929 crash to more recent downturns, and quantitatively demonstrates its strong correlation with subsequent long-term returns. Finally, the sources critically examine modern critiques of the Shiller PE, addressing how changes in accounting, share buybacks, market composition (rise of technology), and interest rate environments may impact its relevance, before concluding with guidance on its strategic application for investors in the contemporary market.
📚 Value Investing Books Recommendation
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Warren Buffett
The Snowball: Warren Buffett and the Business of Life
Kindle: https://amzn.to/3FVasqy
Hardcover: https://amzn.to/3HIfeZ2
Paperback: https://amzn.to/4kBjUOZ
Warren Buffett and the Interpretation of Financial Statements (by Marry Buffett)
Kindle: https://amzn.to/43Vr5dD
Hardcover: https://amzn.to/4n6yNus
Paperback: https://amzn.to/45XBBDL
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Charlie Munger
Poor Charlie’s Almanack
Kindle: https://amzn.to/3Zsw9VB
Hardcover: https://amzn.to/4jMExq7
Collector's Edition: https://amzn.to/3SRgsn7
Tao of Charlie Munger
Kindle: https://amzn.to/4nk0akT
Hardcover: https://amzn.to/44eq8OR
Influence, New and Expanded: The Psychology of Persuasion
Kindle: https://amzn.to/4619DqL
Hardcover: https://amzn.to/40a8TMi
Paperback: https://amzn.to/40gtwq7
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Howard Marks
The Most Important Thing (Uncommon Sense for the Thoughtful Investor)
Kindle: https://amzn.to/3Tqb4Yg
Hardcover: https://amzn.to/3SRyy8A
Paperback: https://amzn.to/45ohdM0
Mastering The Market Cycle: Getting the Odds on Your Side
Kindle: https://amzn.to/3HXPmby
Hardcover: https://amzn.to/45X6AQq
Paperback: https://amzn.to/44oPGYP
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Money Philosophies
The Psychology of Money: Timeless lessons on wealth, greed, and happiness
Kindle: https://amzn.to/3FDbO9u
Hardcover: https://amzn.to/4kL3TGi
Paperback: https://amzn.to/44fpkcC
Limited Gift Version: https://amzn.to/4jYomGp
Same as Ever: A Guide to What Never Changes
Kindle: https://amzn.to/3HXBJcp
Hardcover: https://amzn.to/4l7vPno
Paperback: https://amzn.to/4k2ZHRe
The Almanack of Naval Ravikant: A Guide to Wealth and Happiness
Kindle: https://amzn.to/4lx2a7F
Hardcover: https://amzn.to/4kGX5tf
Paperback: https://amzn.to/3ZEMXsC
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Classic Principles
The Intelligent Investor
Kindle: https://amzn.to/45T9OEv
Hardcover: https://amzn.to/4l4f7W3
Paperback: https://amzn.to/43ZNyXb
Security Analysis, Seventh Edition: Principles and Techniques
Kindle: https://amzn.to/442yKak
Hardcover: https://amzn.to/3TmEEhg
Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor
Collector Edition: https://amzn.to/4lrgWNd
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Disclaimer: All analysis is based on publicly available sources and may be subject to revisions or differing interpretations. The content is for educational purposes only and does not constitute investment advice. Conduct your own due diligence before making investment decisions. Like and Subscribe us on Apple, Spotify Podcasts or Youtube channel: Deep Value Investing! Don’t forget to take the book list of value investing from the episode description! ❤️To support us and bring a Buffett Indicator App alive: https://www.gofundme.com/f/turning-buffetts-wisdom-into-a-daily-tool-for-investors 🎗️
