what is the p e 10 ratio 
the p e 10 ratio is a valuation measure generally applied to broad equity indices that use real per share earnings over 10 years the p e 10 ratio also uses smoothed real earnings to eliminate the fluctuations in net income caused by variations in profit margins over a typical business cycle the p e 10 ratio is also known as the cyclically adjusted price to earnings cape ratio or the shiller pe ratio understanding the p e 10 ratiothe ratio was popularized by yale university professor robert shiller author of the bestseller irrational exuberance who won the nobel prize in economic sciences in 2013 1 shiller attracted attention after he warned that the frenetic u s stock market rally of the late 1990s would turn out to be a bubble the p e 10 ratio is based on the work of renowned investors benjamin graham and david dodd in their legendary 1934 investment tome security analysis the investors attributed illogical p e ratios to temporary and sometimes extreme fluctuations in the business cycle to smooth a firm s earnings over a period graham and dodd recommended using a multi year average of earnings per share eps such as five seven or 10 years when computing p e ratios 2 