Robert Shiller’s two stock-market indexes are telling wildly different valuation stories. Here’s why.

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The Nobel laureate has two ways to measure stock-market valuation -- and each tells its own story about whether stocks are in a bubble.

When making the argument that stocks are overvalued, one index often is trotted out — the cyclically adjusted price-to-earnings ratio popularized by Robert Shiller, the Yale professor and Nobel laureate. The index uses earnings over the last decade, rather than a single year, to provide a long-term perspective. July’s reading of 37.98 is more than double the average, and the highest since the dot-com bubble.

Slater says Oxford’s fair value models for government bonds suggest yields are expensive by anywhere from 20 to 100 basis points. He writes that there’s “a fundamental problem with the low rates argument –– that we may be comparing one overvalued asset class with another.” The chart One topic that’s been doing the rounds is whether the current bull market is relatively young, or an extension of the one that began in 2009 and only ended when the coronavirus pandemic struck the west.

Intuit’s INTU, +0.10% in talks to buy emailing marketing company Mailchimp for more than $10 billion, Bloomberg News reported, citing people familiar with the matter.

 

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