How have the Bottom 25 CAPE Ratio Values Performed Recently?
For additional information see this new article on How the CAPE Ratio Can Help Double The Return of the S&P 500.
Here is how the Bottom 25 CAPE Ratio values have faired since October 1, 2013 through our most recent update on August 1, 2014 (Image is courtesy of Google Finance). It should be noted that this is an equal weighted and unedited portfolio of the lowest 25 CAPE Ratio values as of the first of October (when we first began compiling this information). It is possible that such a portfolio could do better with other analysis. For example if one were to edit out all finance stocks since some CAPE Ratio scholars (See Jeremy Siegel) have indicated that it is unfair to judge stocks utilizing ten years of data when the mark-to-market rules changed within the finance industry. Ultimately, as would be the case with any strategy, a series of stocks chosen purely by the CAPE Ratio analysis would probably not fair quite as well as a group chosen in tandem with other analysis. As a stock screening tool however, it would appear from this chart that the CAPE Ratio can identify some strong winners.
On 9/25/14 we were asked to prepare a list of stocks that had the lowest CAPE Ratio values for the S&P 500 (See List Here). This is how the bottom ten have performed since that time. Also see our Prior Newsletters Tab:
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