Market valuation
Is the market expensive? The clearest gauge is CAPE — price divided by a decade of inflation-adjusted earnings, so a single good or bad year can't distort it. Here it is for the S&P 500 back to 1871, with what each valuation level has historically meant for the next ten years. Pick the earnings window below.
CAPE averages inflation-adjusted earnings over the window to smooth the business cycle. 10 years = Robert Shiller's classic CAPE; shorter windows track a normal P/E, longer ones smooth more.
As of Sep 2026, the S&P 500's 10-year CAPE was 39.7 — the 99th percentile since 1880. When valuations were near this level, the next 10 years returned a median +0.3%/yr real (p10 -3.5%, p90 +5.2%) — 84 comparable months.
Valuation through history. The dashed line is the long-run average; the readout follows your pointer. Peaks mark euphoria (1929, 2000, 2021), troughs mark despair (1932, 1982, 2009).
Each dot is one month: its CAPE (x) vs the real return that followed over the chosen horizon (y). The blue line is the average by valuation level — historically the strongest cheap-vs-expensive signal there is. The dashed line is today.
The other side of valuation: what the index pays out. Yields were 4–6% for most of the 20th century and have compressed as prices rose and buybacks replaced dividends.
How these numbers are put together — and where ours differs from the canonical figure.
CAPE = the S&P 500's real (inflation-adjusted) price ÷ its average real earnings over the chosen window. A 10-year window is Robert Shiller's classic CAPE; we let you pick others. Forward returns are real total returns (dividends reinvested).
Data. Price, earnings, dividends and CPI back to 1871 come from Shiller's public dataset, which carries S&P's published earnings to the last quarter S&P has closed; from there earnings are held against each later month's close, as a trailing multiple is, and CPI continues on the Federal Reserve's series (FRED), chained to Shiller's at the overlap so the line never jumps.
Caveat. This is our reconstruction — close to, but not identical to, the official Shiller CAPE (our aggregate earnings differ slightly in method and timing from the index's as-reported figure). Treat it as directionally accurate, not the canonical decimal. Latest complete window: Sep 2026 (bounded by company filing lag).
The scatter's readout. 1630 dots is too many to give each its own styled tooltip, so every dot carries a native title instead — hover and hold for its month, CAPE and outcome.
Valuation is a long-horizon signal with wide error bars — useless for timing, informative for expectations. For informational purposes only; not investment advice.
FAQ#
- What is the CAPE ratio?
- CAPE (cyclically-adjusted price-to-earnings), also called the Shiller P/E or PE10, divides the S&P 500's price by the average of its inflation-adjusted earnings over the past 10 years. Averaging a decade of earnings smooths out the business cycle so booms and busts don't distort the ratio.
- Does a high CAPE mean a crash is coming?
- No. CAPE has essentially no power to predict short-term moves or time the market — expensive markets can stay expensive for years. What it has historically tracked is the next 10–15 years of real returns: higher starting valuations have, on average, been followed by lower long-run returns, with wide error bars.
- Why let me change the earnings window?
- Shiller's CAPE uses a 10-year earnings average. A 1-year window is essentially a normal trailing P/E; longer windows (15–20 years) smooth even more. Comparing windows shows how much the smoothing choice matters to the picture.
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