I’ve posted Entry # to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called P/E10 Permits Us to Quantify Investor Emotion.
Juicy Excerpt: Greenburg wrote: “Thank you so much, Robert Shiller. For all the illumination you have provided in housing, equities and markets generally. I’ve been a tremendous fan. And have even changed my tax law practice because of you (focusing not just on financial details but on the psychology of the clients as well).”
That’s precisely on the mark. People don’t get this. They think of Shiller as another guy who offers tips on how to do well in the stock market. He is so much more than that. P/E10 is an amazing concoction. It is a metric that tells us how emotional the market is at any given time. It is like a thermometer that tells us not how hot it is outside but how irrational we all have become inside. There’s never been anything like this. It is an amazing advance.