Faber Uses CAPE To Compare Global Markets, Addresses Critics

After an incredible rally in 2013, sentiment on US stocks is bullish, bordering on euphoric. Some analysts think investors should buy stocks now so as not to miss out on the rest of the recovery, while others worry that we are in a liquidity bubble driven by years of loose monetary policy. In his latest book, Global Value: How to Spot Bubbles, Avoid Market Crashes, and Earn Big Returns in the Stock Market, Cambria Investment Management portfolio manager Mebane Faber explains how to cut through the noise by applying the CAPE ratio (cyclically adjusted price-to-earnings) to the US market. More…