Figure 1
![Shiller Total Return CAPE Ratio im Vergleich zu den jährlichen Renditen](https://www.columbiathreadneedle.pt/uploads/2021/10/23732e335984d7a6353dd07b71716e79/en_toby_nangle_aa_update_october-2021_fig1.png)
Figure 2
![Ratio CAPE de Shiller ajusté en fonction de la performance totale par rapport aux performances annuelles](https://www.columbiathreadneedle.pt/uploads/2021/10/7922662b2b76703e197cc05940aecce6/en_toby_nangle_aa_update_october-2021_fig2.png)
Pulling the bond and equity sides together, we can look at the excess yield that an inverse CAPE ratio – ie, the cyclically-adjusted earnings yield – offers in excess of US Treasuries. The way that this relates to subsequent 10-year returns in Figure 3 looks sketchier than Figure 1. Moreover, it doesn’t explain some of the wild swings – the period that captures investing at the height of the dotcom boom and cashing out in the depths of the global financial crisis, or the post-GFC boom that captures investing in the depths of the GFC itself and cashing out around now. But I don’t think it is an unreasonable way to think about the impact of valuation on longish-term return horizons. Through this lens, excess returns “promised” by equities versus bonds are middling-to-attractive. But on a low absolute bond base.
Figure 3
![Toby Nangle AA update October 2021](https://www.columbiathreadneedle.pt/uploads/2021/10/cc7cab694ffcc49553b140b734968296/en_toby_nangle_aa_update_october-2021_fig3.png)
Figure 4
![Toby Nangle AA update October 2021](https://www.columbiathreadneedle.pt/uploads/2021/10/8c2ddf34f9912ca454fadc55422df226/en_toby_nangle_aa_update_october-2021_fig4.png)
Where does that leave us today?
![Asset allocation snapshot](https://www.columbiathreadneedle.pt/uploads/2021/10/1bbf7a7cc34ee9e14cd4857f9944f820/en_toby_nangle_aa_update_october-2021_fig5-1024x729.png)