Can You Pick Undervalued Markets With the CAPE Ratio? The ETF Route, the 14.7% Backtest, and the 8.3% Reality
Can you buy the world's cheapest stock markets the same way you buy an index fund? Yes — two ETFs try exactly that. But the one with a live track record has returned 8.3% a year since it launched, against 13.3% for the S&P 500. The US market trades at nearly 40 times its ten-year average earnings. Turkey's trades at 6 times. That gap is the whole pitch for CAPE-based investing: use Robert Shiller's cyclically adjusted price-to-earnings ratio to find the cheap markets, then buy them. This briefing shows the October 2026 map, how the two ETFs that do this actually work, what the famous 14.7% backtest really says, and the three traps to know before using the ratio at all. All figures are as of November 9–11, 2026, unless noted otherwise. What the CAPE ratio actually measures The CAPE divides a market's price by its average inflation-adjusted earnings over the past ten years. That ten-year window is the point. A normal P/E uses one year of earnings, so it jump...