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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: StevnFool ✶  😊 😞
Number: of 15062 
Subject: Re: Exploding CAPEtown
Date: 02/04/2024 5:02 PM
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I think the idea of FAPE1 working is somewhat flawed as you can only draw the straight line retrospectively so it includes a crystal ball element.

FAPE2 is interesting. I think there is some validity to it working. If you accept that prices are pulled slowly or even weakly (mean reverting) to some "typical" multiple of earnings, it follows that for a large index, the moving average of price will align to some extent with certain multiple of value (earnings). So it is not so surprising that this works.

StevnFool
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