1. The fundamentals
Chapter 1 of 6 · 4 min
Chapter 1 explores the fundamentals of cyclical adjustment with a focus on practical application.
10x Insight
The fundamentals of cyclical adjustment is central to understanding cyclical adjustment.
The fundamentals of cyclical adjustment is central to understanding cyclical adjustment. This chapter gives a thorough walkthrough of the concept and its link to CAPE / Shiller P/E.
In a Swedish context, cyclical adjustment is especially relevant because Swedish investors face unique challenges. Robert Shiller contributed in 1988 to our understanding of this area.
The chapter combines theory with practical examples from the Swedish stock exchange, making the content directly applicable for retail investors.
To apply cyclical adjustment in practice, start by identifying the relevant variables in your analysis. Swedish companies offer good examples of how cyclical adjustment works in reality.
A systematic approach to cyclical adjustment gives better results than ad hoc decisions. The AKM1 methodology integrates cyclical adjustment into its 20 variables for a holistic picture.