It is an analytical frame....a reference point to which you add/amend inputs/structural assumptions to assess risks to valuations/return expectations. Many factors are impacting market forces and hence the ability of rules of thumb such as the CAPE to work: i.e. unconventional monetary policy, increasing share of national income going to profits. Other risks are building up: lower capex re future returns; higher leverage to underlying GDP flows; aging/declining pops etc. Just because a market appears to be defying gravity in a valuation dimension does not mean valuation is irrelevant or that valuation measures that strongly suggest over valuation are incorrect. we have an excess of asset focused money supply growth that has strongly influenced asset valuations for some time. The risks are building up, the divergence between asset prices and their flows and the growth rate of flows are widening.....