How many times have you read or heard a financial term and thought, “What the…?”
You know, something like “QE” or “FOMC” meeting.
They’re what I call “Annoying Acronyms.”
Essentially, they’re a shortened version for something that’s confusing to the average investor.
Today let’s look at another confusing one called the CAPE ratio (CAPE meaning “Cyclically Adjusted Price Earnings). My first reaction was “Huh?”
The Wall Street explanation for CAPE is: The cyclically adjusted price-to-earnings ratio, commonly known as CAPE, Shiller P/E, or P/E 10 ratio, is a valuation measure usually applied to the US S&P 500 equity market. It is defined as price divided by the average of ten years of earnings (moving average), adjusted for inflation.
By now, you’re thinking…” What the…?”
Supposedly this is a more complete valuation picture than a simple P/E (Price/Earnings) ratio. But let me give you an explanation you can understand.
CAPE is another MBA term to give you the impression that gurus have superior knowledge than you do. Therefore, you need to believe every word they say. It also is used as a very effective scare tactic.
Today, many gurus are screaming about the CAPE ratio approaching 30. They’re saying, “This has only happened twice in history…1929 and 2000.”
In other words, they’re using it as a market crash indicator.
Don’t be, because it’s just another group of banksters talking their book. (tactics to trick you into doing what they want you to do).
Stand up to these creeps and educate yourself on their “secret language.” It’ll help you avoid their traps.
Learn more about this “secret language” in our monthly newsletter, “…In Plain English and use it to your advantage.
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You’ll thank me later.