are the “adjusted earnings over the last 10 years” adjusted for inflation?
Generally CAPE past earnings are adjusted to inflation.
Historically the stock market has responded badly over time to a rapid change upwards in inflation particularly if interest rates rise correspondingly, due to valuation effects (“net present value”) . Subsequently once the market has fallen it tends to act as a reasonable inflation hedge. Typically this occurs around the point when Time Magazine has a front cover saying something like “The Death of Equities”.
Different stocks respond differently to inflation. Consider the analogy of the Nifty Fifty of the late 1960s and the high flying tech stocks of today.
Generally CAPE past earnings are adjusted to inflation.
Historically the stock market has responded badly over time to a rapid change upwards in inflation particularly if interest rates rise correspondingly, due to valuation effects (“net present value”) . Subsequently once the market has fallen it tends to act as a reasonable inflation hedge. Typically this occurs around the point when Time Magazine has a front cover saying something like “The Death of Equities”.
Different stocks respond differently to inflation. Consider the analogy of the Nifty Fifty of the late 1960s and the high flying tech stocks of today.