Understanding the CAPE (Cyclically Adjusted Price-to-Earnings) ratio and SORR (Sequence of Returns Risk) matters if you’re investing in the stock market and making future plans based on those investments. These metrics provide a stable benchmark for valuation and can help identify market bubbles or periods of undervaluation; they’re important to understand and can help inform your future plans.
Andrew joins this week’s podcast as we talk about:
- What CAPE ratio and SORR stand for and how to calculate them
- How CAPE ratio is different from the standard P/E ratio
- The methodology behind the CAPE ratio calculation and SORR
- Why you’d want to understand these metrics
- How these metrics might influence your early retirement plans and timing
- Strategies to mitigate SORR
Get the full show notes, show references, and more information here: https://www.insideoutmoney.org/067-two-investment-metrics-you-should-understand-cape-ratio-and-sorr/
