A CAPE For Canada

I have been thinking about what Shiller's Cyclically Adjusted P/E  (CAPE) ratio would look like for Canada for sometime. Basically, CAPE takes the price of an index and divides by a 10 year moving average of earnings. CAPE charts for the US are easily accessible, but so far, CAPE ratios for other countries are not that numerous. On his blog, Mabane Faber has posted CAPE ratios for a number of different countries including Canada.

Here is what the CAPE ratio looks like for Canada.

 Here is what the TSX looks like over the same time period.

Notice that the CAPE has been trending downwards across time making it difficult to get clear over/under valuation signals. While CAPE may be useful for the US and other countries, I am not sure how useful it is for Canada.