The market multiple is highly sensitive to volatility. These empirical results suggest that a permanent 1 percentage point increase in market volatility can, over time, reduce the market multiple by 1.8. Hence, any assessment of market valuation that ignores the impact of volatility on the equilibrium P/E is inherently perilous.
No takes yet. Share an insight, caveat, or question.
Kane et al. (1996) studied this question.
Synapse has enriched 4 closely related papers on similar clinical questions. Consider them for comparative context: