CAPE Ratio Calculator
The formula
What the cape ratio tells you
A transparent linear conversion for cape ratio: the factor is visible, the arithmetic is shown, and the inverse direction comes free.
Calculation: converted = value × factor; inverse = value ÷ factor. Enter your inputs and every substitution is shown below the result.
Reading the result
Keep to the significant figures your inputs carry; the 6-dp line exists for verification, not reporting.
Limitations and best practice
Factor direction is the classic slip — confirm which unit multiplies to which with one known pair.
This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Frequently asked questions
Why show the inverse?
Where do factors come from?
Source & methodology
Unit-conversion definitions (NIST SP 811).
CAPE Ratio explained: formula, worked example and honest limits
This page was written for one job: turning your own inputs into a defensible figure, with the working shown. There are plenty of pages about CAPE Ratio; almost none of them show the working. This one does: the formula, every input, a fully computed example, and a sensitivity analysis calculated live from this engine’s own defaults.
Like most useful measures, CAPE Ratio is a summary, and summaries hide as much as they reveal. The companion outputs and the input table are here to reopen what the headline compressed.
People rarely disagree about arithmetic; they disagree about assumptions that were never written down. Printing the substitution and the sensitivity ranking removes that category of disagreement for CAPE Ratio.
Nothing below is stock text pasted around a number: the worked example computes CAPE Ratio = 115.000 from this tool’s own defaults, and the sensitivity section ranks the inputs that move the result — Input value first, at ≈10.0 % of the headline for a ten-percent error either way in that input. Work down the page and by the end you could re-derive the result in a spreadsheet from memory.
Every input in CAPE Ratio, and what it does to the answer
Here is the complete model this tool runs — converted = value × factor; inverse = value ÷ factor — with each input explained below. If a competitor’s page gives you a different answer from the same inputs, this is the text that settles which of you is right.
Input value (example value 115) is a quantity rather than a category — precision here is cheap and worth having. The example value is there to demonstrate the mechanics, not to describe your situation — overwrite it.
Conversion factor (example value 1) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. Replace the example with the figure from your own records — the tool recomputes instantly and the printed steps follow your numbers.
Reciprocal check — inverse direction (example value 94) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. If you are unsure what belongs in this field, look at the printed steps: the substitution shows exactly how the engine uses it.
The default CAPE Ratio calculation, written out in full
Abstract formulas are hard to trust, so here is the complete substitution using the default inputs, written the way an examiner would want it. Starting figures: Input value, Conversion factor, Reciprocal check — inverse direction. The endpoint of that chain is 115.000 of CAPE Ratio, sitting in the “Factor of 1 — the units are identical here” band.
- Result = 115.000 × 1.0000 = 115.0000
- Sanity check: ÷ factor again returns 115.000
Inverse at same magnitude — 115.000. Read next to the headline, this is the figure that shows the shape of the trade-off.
Factor × value shown to 6 dp — 115.000. Compare it against the main result of 115.000 before drawing conclusions.
Doubled input — 230.000. Read next to the headline, this is the figure that shows the shape of the trade-off.
Re-running with your own figures is instant; re-running by hand once is the best way to know the tool is telling you the truth.
Scenario table: CAPE Ratio at ±10 % and ±20 % of the key input
Single-point answers invite false confidence, so the same engine was run across a band around the input that matters most here. Each row is a full recalculation of CAPE Ratio, not an interpolation.
| Input value setting | CAPE Ratio |
|---|---|
| 80 % of the example value | 92.000 |
| 90 % of the example value | 103.500 |
| example inputs | 115.000 |
| 110 % of the example value | 126.500 |
| 120 % of the example value | 138.000 |
Across 5 settings of Input value, the result spans 92.000 to 138.000. A decision that only works at one row of this table is a decision waiting for an input to move. Reproduce it in the form above by editing Input value alone; the substitution steps will follow your figures exactly.
The levers behind CAPE Ratio, ranked by effect
Generic advice says “it depends on your inputs”; this section says exactly how much. Each field was perturbed by ±10 % in isolation and the CAPE Ratio recomputed, so the ranking below is measured rather than asserted. It is the fastest honest answer to “what matters most in CAPE Ratio?” — and it is specific to these defaults, because sensitivity moves with the starting point.
- Nudge Input value by ±10 % and CAPE Ratio lands between 103.500 and 126.500 (sensitivity ≈10.0 %)
- Conversion factor: ten percent up gives 126.500, ten percent down gives 103.500 — ≈10.0 % of the CAPE Ratio either way
Input value is the dominant lever here: ten percent either way moves the result by about 10.0 %, from 103.500 to 126.500. That is where a careless figure does the most damage, so check it against a source, and Conversion factor is effectively tied with it (≈10.0 % for the same nudge), so verify the pair together. Everything below that can stay approximate, which is a licence to stop chasing data that would not change the decision.
Is your CAPE Ratio good — reading the result bands
Nobody acts on a bare figure — they act on a figure with a comparison attached. The verdict attached to the default calculation — “Factor of 1 — the units are identical here” — is one band on a ladder your own figure may sit somewhere else on. The sensitivity list shows how far a modest input error moves you along that ladder: for Input value, ±10 % covers 103.500 to 126.500. The practical reading rules: ask what would have to change to move you one band. If the answer is “a small, plausible input difference”, the band itself is not the finding — the uncertainty is.
Related measures answer related questions, and the distinctions matter: CAPE Ratio is the quantity, CAPE Ratio is this tool’s reading of it, and the decision that follows belongs to neither of them separately.
Common mistakes with CAPE Ratio (and the fix)
Factor direction is the classic slip — confirm which unit multiplies to which with one known pair. This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Comparing a CAPE Ratio computed here with a figure from another source that uses different conventions. Same name, different denominator — the disagreement is usually in the definitions, not the data.
One mistake is specific to this engine: assuming every input matters equally. The computation above shows Input value dominating — a careful figure there beats false precision everywhere else.
A final trap is presentation: reporting CAPE Ratio to more decimal places than the inputs support. The tool prints what the arithmetic gives; you should quote only what your least precise field justifies.
Six things to confirm before acting on CAPE Ratio
- Re-run the calculation with a ±10 % stress on the two most sensitive inputs.
- Confirm the example values are plausible for your own situation before replacing them.
- Re-verify Input value against a source document — ten percent of error there moves the headline by ≈10.0 %.
- State, in one sentence, which convention each rate, unit or period in the form is using.
- Record the date and the inputs alongside the number so future-you knows what was assumed.
- Run the ±10 % stress on the top two levers and check that your conclusion survives both.
How to use the CAPE Ratio tool properly
Using a calculator well sounds trivial, but the difference between a decision-grade figure and a throwaway one lives entirely in the routine. The routine for CAPE Ratio takes a minute to learn and applies to every input above.
Step 1 — one document, one pass. Open the statement, label or record that holds input value, conversion factor, reciprocal check — inverse direction and transcribe straight into the form. Transcription from a single source removes the mismatch errors that appear when figures are assembled from three different places. A figure with a date beside it becomes evidence; without one it stays an anecdote.
Step 2 — compute the version you would not be embarrassed by. If a stranger audited your inputs, which set would you hand over? Enter that set, read the result, and treat everything else as upside. One decimal place more than your data supports is one decimal place of fiction.
Step 3 — measure what deserves measuring. The ranked levers above tell you where a careful figure pays off. Everything else can stay approximate, which is a licence to stop hunting for data you do not need. Estimates improve most when the worst case is written down in ink.
Step 4 — ask what would have to be true. Take the result you want and work backwards through the inputs until you find the assumption that produces it; then decide honestly whether that assumption is defensible. The inputs are the part of the work that nobody else can do for you.
Step 5 — record the context, not just the number. Note today’s date and the inputs alongside the 115.000 output. Six months from now the context is what turns this figure into a trend. Precision is a promise you make about your data; make sure your inputs can keep it.
The real-world conversations CAPE Ratio settles
Investing & Markets arguments end at arithmetic or they do not end. CAPE Ratio is the arithmetic: 115.000 on the example inputs, reproducible by anyone who types the same numbers. The test of a good estimate is not that it feels right but that it changes what you do.
The companion outputs — Inverse at same magnitude and Factor × value shown to 6 dp — exist for the second stage of that screen: the headline sizes the prize, while the companions describe the trade-off you are accepting to get it. If the verdict changes with a ten-percent nudge, report the nudge alongside the number.
Nothing here is stored or transmitted, so the habit of checking is free: open the page, re-enter current figures, compare with the number you saved last time. Numbers are cheap to produce and expensive to retract; the extra minute is the cheapest insurance available.
CAPE Ratio — frequently asked questions
What affects CAPE Ratio the most?
Measured on this engine, Input value is the dominant lever: moving it ±10 % shifts the CAPE Ratio across 103.500 to 126.500 — about 10.0 % of the headline, with Conversion factor next at ≈10.0 %. The ranked list in the sensitivity section is computed live, not asserted from a template.
Do conversion factor and input value matter equally?
On these inputs, yes: the two measured within a rounding error of each other — ≈10.0 % and ≈10.0 % of the CAPE Ratio per ten-percent change. Treat them as one pair to verify together rather than ranking them.
What is a typical CAPE Ratio?
On the worked example above CAPE Ratio comes out at 115.000. Treat that as one point on a distribution rather than a norm: the bands, the companion outputs and the sensitivity ranking tell you how wide the plausible range really is.
How do I calculate CAPE Ratio by hand?
Use the stated model — converted = value × factor; inverse = value ÷ factor — and substitute in the order the tool prints (it starts from Result = 115.000 × 1.0000 = 115.0000). On the example inputs the hand route lands on 115.000, exactly what the calculator shows. A spreadsheet reproduces it in two or three cells; doing it once by hand is what makes the automated answer trustworthy.
What happens to CAPE Ratio if input value changes by 10 %?
On these inputs a ±10 % change in input value takes CAPE Ratio to 126.500 against the 115.000 example — around 10.0 % of the headline. The same test on every other field is in the sensitivity section.
Is the CAPE Ratio result of 115.000 good or bad?
The tool answers “what”, not “whether”: 115.000 carries the verdict “Factor of 1 — the units are identical here” for the default case, which is a starting interpretation rather than a verdict on your situation. Re-run with your own figures and compare the bands.
Does CAPE Ratio account for fees and taxes?
Only what you put in. Fees belong inside Input value where they shrink returns before compounding touches them; taxes are outside the scope of a pre-tax CAPE Ratio and should be layered on top before decisions.
What is a good CAPE Ratio?
Markets give away free benchmarks: anything that beats the relevant index after costs earns the label "good", and this tool’s verdict band translates CAPE Ratio against experience ranges. Before that, check that the inputs are realistic — a great CAPE Ratio built on optimistic inputs is just a nicer-looking error.
Why show the inverse?
The reciprocal factor catches sign errors: multiply-then-divide must return the original.
Where do factors come from?
Definition tables (SI, imperial statutes); any factor not from one is a convention worth questioning.
Is my data private on this page?
Yes — computation happens locally in your browser, with no account, no tracking of your inputs and nothing sent to a server. The printed formula is the whole story of what happens to your figures.
Glossary for CAPE Ratio
- Inverse at same magnitude
- 115.000 on the example inputs — a companion figure printed beside the headline of CAPE Ratio so that no result is read in isolation.
- Factor × value shown to 6 dp
- 115.000 in the default CAPE Ratio calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Doubled input
- 230.000 in the default CAPE Ratio calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- CAPE Ratio
- The primary output of this tool: 115.000 for the default inputs, computed exactly from converted = value × factor; inverse = value ÷ factor.
- Worked example
- The step-by-step substitution printed above, so the arithmetic can be re-derived by hand or in a spreadsheet.
- Verdict band
- A named zone on the range of plausible results; the example inputs land in “Factor of 1 — the units are identical here”, and your inputs may not.
- Sensitivity (±10 %)
- How far the CAPE Ratio moves when a single input is nudged ten percent either way; the ranked list on this page is computed live from this engine.
Where the CAPE Ratio model comes from
The model is published arithmetic implemented exactly as written: converted = value × factor; inverse = value ÷ factor. Source of record: Unit-conversion definitions (NIST SP 811). Where a professional version of this calculation differs, it differs in inputs and jurisdiction-specific coefficients, not in the algebra — which is why re-checking your inputs beats hunting for a second calculator.
This page is an estimation aid, not professional advice. The design rule is simple: two people entering identical figures must get identical answers. The promise to the reader is narrow and testable: same inputs, same output, no silent rounding, and no figure presented without the formula that produced it.
What to do with your CAPE Ratio next
Re-run the calculation with your own figures, stress the two most sensitive inputs by ±10 %, and only then act on the result.
This page was written for people who need one trustworthy number before their next decision, and the promise is that nothing above required trust. Bookmark the tool, re-run it whenever an input moves by more than a few percent, and keep the date with the number.