Robert Shiller's revered stock market valuation ratio is crappy at predicting 12-month returns

Stock prices relative to earnings are very expensive. This is reflected by the high price-earnings (PE) ratio. One closely-followed version of the PE ratio is Robert Shiller's cyclically-adjusted price-earnings (CAPE) ratio, which is calculated by taking the S&P 500 and dividing it by the average of ten years worth of earnings.  If the ratio is above the long-term average of around 16x, the stock market is considered expensive. CAPE is currently at 26x, a level last seen during the dotcom bubbl...