She Caught the CATY, and Left Me a Mule to Ride: Improving on Dividend Yield as an Indicator of Stock Valuations and Expected Returns

Laurence Articles

The title of this essay refers to two things: (1) a great Blues Brothers song; and (2) a new measure of market valuation set forth by Philip Straehl and Roger Ibbotson, the CATY or cyclically adjusted total yield. Straehl and Ibbotson [2017] developed the CATY as a substitute for Robert Shiller’s CAPE or cyclically adjusted price-earnings ratio, a measure that …