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Hussman/Smithers margin-adjusted CAPE: the regular Shiller CAPE scaled by the ratio of today's corporate-profits-to-GDP margin to its long-run mean. Quarterly, 1947-present.

Why it matters: CAPE smooths earnings over a 10-year window, but if margins have been *persistently* elevated for a decade (as they have post-2010), the smoothed earnings still embed those high margins. Critics — most prominently John Hussman and Andrew Smithers — argue margins are mean-reverting (competition, regulation, labor share, currency dynamics) and so any valuation built on smoothed earnings is silently importing the assumption that today's margin regime persists. MAPE adjusts for that: when margins are cyclically high, it ratchets CAPE upward; when margins are depressed, downward.

How to read it: Today's corporate margins are at all-time highs (~14% vs long-run ~10%), so MAPE > CAPE — the headline result. If you believe margins will normalise toward the long-run mean, MAPE is closer to the "true" valuation than CAPE itself. If you believe today's margins are a permanent regime change (asset-light economy, market power, tax structure), CAPE is fine and MAPE is over-penalising.

Caveats: This is a contested adjustment. Camps that don't believe in margin mean-reversion (more growth-focused investors) view MAPE as moralistic. Camps that do (Hussman, Smithers, GMO) view CAPE without the margin adjustment as naive. Worth treating as a lens, not the answer.