It's been hard to make sense of this market.
On one hand, Wharton Professor Jeremy Siegel went on CNBC last week and proclaimed that the Dow Jones Industrial Average
|Dow Jones Industrial Average||14.5||2.3|
|S&P 500 ||15.8||2.3|
Source: S&P Capital IQ.
On the other hand, there are pundits like Andrew Smithers, who recently declared that U.S. stocks are as much as 71% overpriced.
Smithers believes the market to be overvalued based in part on a metric created by Yale Professor Robert Shiller called the cyclically adjusted price-to-earnings ratio, or CAPE. The CAPE divides the market's price by the average of a full 10 years of earnings -- thus correcting for the cyclicality of corporate earnings.
Last week, Professor Shiller stopped by Motley Fool Headquarters in Alexandria, Va., and sat down for an interview in our offices. I asked him whether the CAPE shows an over- or undervalued market -- watch the following video for his insights. (Scroll down beneath the video to see a transcript.)