[tslathrow]

I assumed you could just look in any introductory finance textbook, but here:

CAPE Formula:

- Adjust each of the yearly earnings of the last 10 years for inflation.

- Average the result of the step 1.

- Divide the current price by the result of step 2.

When I say yearly earnings I really mean trailing twelve months. Use TIPS etc to adjust for inflation.

CAPE is mostly horseshit but basically it's designed to give a sense of over/undervaluation of risky assets

It's about as awful as any other valuation metric though.