Reality Gap
A Research-Based Indicator for Fundamental Coverage
Reality Gap (RG) measures the relationship between a company's market capitalisation and its estimated fundamental base — derived from smoothed earnings and tangible equity. It is a heuristic coverage indicator, not an intrinsic value model.
All data shown is illustrative. See the methodology for details.
Methodology
How RG8, RG10, and RG12 are constructed and what they measure.
Explore →
Working Paper
The full methodological foundation and theoretical context.
Explore →
Rankings
A comparative view of companies sorted by their RG10 value.
Explore →
Companies
Individual RG profiles for each company in the dataset.
Explore →
Research
Fragility analysis: Core RG vs. Narrative RG, spread, and market structure.
Explore →
Macro RG
Market-level RG approximation via Shiller CAPE (S&P 500) and trailing P/E (DAX 40).
Explore →
Unlock the Gap: A Call for Data Collaboration
The Reality Gap framework was developed to make the distance between market valuations and conservative fundamental coverage more visible and easier to discuss. While markets increasingly capitalize long-dated expectations, dominance narratives, and strategic optionality, the underlying historical data needed to examine valuation stretch across countries and sectors often remains difficult to access outside institutional settings.
Why this matters
A broader empirical application of the RG framework — across major indices, sectors, and international markets — requires historical financial data that are often concentrated in proprietary databases. This creates a practical asymmetry: large institutions can explore these questions relatively easily, while independent researchers and the broader public face substantial barriers.
What we are trying to build
The long-term goal is a publicly accessible research environment in which users can compare the conservative coverage of major equity universes such as the S&P 500, DAX, Nikkei 225, and others. This is not primarily a commercial project. It is an attempt to make valuation stretch and market fragility more transparent and more discussable.
How you can help
We are not asking for financial donations, but for data cooperation within legal and licensing boundaries. Particularly helpful would be:
- — Aggregated macro data. Already useful are verified long-run series such as ten-year averages of inflation-adjusted earnings for major indices.
- — CAPE-based macro proxies. Historically consistent CAPE-style series for markets outside the United States would be highly valuable.
- — Sector-level aggregates. Aggregated valuation and earnings series for sectors or industries could extend RG-based fragility analysis.
- — Methodological guidance. Advice on legally usable public or institutionally shareable aggregate data sources is equally welcome.
Important note
Please do not send raw data or materials in violation of license terms, database contracts, or institutional access rules. We are interested only in contributions that can be shared and used lawfully.
Join the research effort
The broader aim is to develop Reality Gap into a transparent research framework that can be tested, challenged, and improved over time. If you have relevant data access, methodological expertise, or ideas for extending the empirical base, you are welcome to get in touch.
Reality Gap is not a business model first. It is an attempt to make valuation stretch more transparent in a world where market narratives often travel faster than fundamental coverage.