CAPE Ratios

The Global Financial Database provides data on Cyclically-Adjusted Price-Earnings (CAPE) Ratios from over 40 countries. In addition to this, GFD provides CAPE Ratios using different indices and different sectors in the United States (S&P 500, Dow Jones Industrial Average).

The CAPE Ratio is defined as the price divided by the average of ten years of earnings adjusted for inflation; however, using different time periods to adjust the price-earnings ratio yields different results. The CAPE Ratio Tool enables users to choose the time period they feel is most appropriate, from 3 years to 30 years, and calculate a CAPE Ratio for that time period and for that country or index.

Each country and each sector may respond more effectively to one maturity of CAPE Ratios than another. There is no reason why “one size fits all” and a 10-year CAPE Ratio fits every case. Finaeon allows you to analyze stock indices and determine which CAPE Ratio works the best with each country and index.