Q4-10

(Using S&P Estimates as of Dec 2010)

Combined Fair Market Value

(CFMV)

S&P 500 Fair Value

A Comparison of Professor Robert Shiller’s

Cyclically Adjusted Price to Earnings (CAPE 10),
Nominal Price to Earnings,
Monthly Price to Earnings,
And Year – Over –Year Earnings Growth

By Chris Turner
I. Estimates for CFMV Q4-10:
The estimates for 4th Quarter CY-10 earnings (Oct - Dec) Combined Fair Market Value (CFMV) using data
sets from the S&P Website (S&P Website ) and Professor Robert Shiller (Shiller Online Data) are listed below:

A. Nominal period trailing earnings – Calculated using Shiller’s method of current S&P 500 Index price
at month close divided by average earnings over column period earnings.
B. CPI Adjusted (Shiller Method-CAPE) – Professor Shiller adjusts current S&P 500 Index price and 4
quarter trailing earnings at month close by CPI, then divides CPI-adjusted price by CPI-adjusted
earnings 10 years. The 10 year calculation is the original Shiller Method – the other periods are
calculated the same method but for differing periods.
C. Monthly P/E Averages – Calculated by dividing monthly price by monthly 4 quarter trailing earnings.
NOTE: This calculation results in the same number whether using CPI or nominal.
D. Historical Y-O-Y Earnings Growth: Calculated by averaging of entire time period earnings growth
year over year.
E. Combined Fair Market Value - Calculated by averaging Current Price (sentiment), average of all
periods nominal and Monthly P/E, and Y-O-Y earnings growth. This does not include Shiller’s CAPE.
S&P Index = Average of daily closes for month end.