Molson Hart

I'm not 'admitting' it's wrong because I don't think it is wrong. If I did, I would admit it. I already provided a response to your critique in the subsequent comments. I assume buyback takes place at end of year at at 16/15th of starting price @ 15x earnings.

But that doesn’t make sense when you’re retiring 1 in 15 instead of 1 in 16 shares. In any case, my point about market cap vs total earnings is the meat of my point.

And it's not as if the methodology I decided to use is flawed. Buybacks typically are spread over the year, as are many dividends which are typically paid quarterly in the US. You're primary criticism is my analysis of how buybacks distort CAPE is wrong. I don't see how it is?

It’s the way you used EPS. If you just look at market cap/earnings, then buybacks and dividends give the same CAPE result. With that said @svrnco sent me some paper where shiller said corporate payout policy affects cape so I have to read that before being confident.

I don't really follow your argument (3). CAPE is calculated as price/10y trailing earnings, so if EPS is increasing over time while P/E remains constant, then CAPE will be inflated. Only way this doesn't apply is if you're arguing that P/E will change in response to buybacks.

I don’t know what 3 is a reference to but my original tweets are clear. What you wrote doesn’t make sense to me. Think of it this way. Cape has a bunch of variables in its calculation: earnings, price, time, inflation. You’re saying EPS is changing. Why? Because # of shares is.

Where is # of shares in that calculation? It’s not there. Therefore it does not affect CAPE.

These are my original tweets https://twitter.com/molson_hart/status/1249134084514811904?s=21 …https://twitter.com/Molson_Hart/status/1249134084514811904 …