Five equal-weight valuation measures
The production composite currently uses five inputs, each contributing one-fifth of the score. It does not include every valuation measure shown elsewhere in the dashboard: for example, Equity Risk Premium is available as a separate indicator and is not one of these five composite inputs.
| Measure | What it compares | Primary feed used by the app |
|---|---|---|
| Shiller CAPE | Price relative to a long, inflation-adjusted earnings history. | Multpl monthly CAPE data |
| Forward P/E | Price relative to forward earnings estimates for the S&P 500. | WSJ market data, with persisted history |
| Buffett Indicator | Broad market value relative to GDP. | Wilshire/FRED inputs and the app's calculation |
| Price/Book | S&P 500 price relative to book value. | Multpl monthly price-to-book data |
| Tobin's Q | Corporate equity market value relative to corporate net worth. | FRED quarterly series |
How a 0–100 score is calculated
For each measure, the app counts observations at or below the current value in the selected baseline and applies a small-sample adjustment: (count at or below + 0.5) / (observations + 1). The five resulting percentiles are averaged and multiplied by 100. All five measures therefore have equal weight even though they have different units and publication schedules.
The default rolling baseline uses the app's 20-year reference arrays. The optional fixed baseline uses the longer fixed reference arrays. The API accepts ?baseline=rolling or ?baseline=fixed; the dashboard defaults to rolling. A high percentile is labeled 65–85 Overvalued or 85–100 Significantly Overvalued; 35–65 is Fair Value, 15–35 Undervalued, and 0–15 Deeply Undervalued.
These labels describe the position of the selected measures in their reference distributions. They do not say that an asset is certain to mean-revert, that the market cannot become more expensive, or that an individual company is cheap.
Interpretation and limitations
Valuation measures are slow-moving and can disagree. A market can remain at a high percentile while earnings, rates, margins, or the composition of the index change. CAPE, book value, GDP, and forward earnings also have different definitions, frequencies, and revision patterns. The dashboard exposes source status, confidence, degraded factors, and disagreement alerts so users can inspect whether the composite is based on live inputs.
Provider pages can be delayed or unavailable. In those cases the API may return a cached or fallback value and mark the factor accordingly. The composite is an informational research aid, not a target price, personalized recommendation, or investment advice.
Sources and related guides
- Federal Reserve Economic Data (FRED) for many macroeconomic, rates, credit, and market series.
- Yahoo Finance for selected market and volatility history.
- Multpl for Shiller CAPE and S&P 500 price-to-book history.
- The Wall Street Journal market data for the current S&P 500 forward P/E input.
- Cboe, AAII, CFTC, CNN Fear & Greed, FinViz, Treasury Fiscal Data, and other clearly labeled provider feeds for individual indicators.