Market Topic: Valuation & Returns

As possibly the most well known value investor, Warren Buffett made an important distinction when he said “Price is what you pay. Value is what you get.”. Robert Shiller is a Nobel prize winning economist who studied markets and concluded that prices are not always rational, and risk is not always random. The relationship he identified between stock market valuations and forward returns is interesting, particularly at this time when valuations for the S&P 500 and many of its biggest names are very high in a historical context.

This video is part of a series we’re creating on market and economic topics to provide more information than we’re able to include in our weekly newsletter. We hope it’s helpful!

Market Topic with education on the Shiller CAPE ratio and the historical relationship between valuations and forward returns.