How expensive is the stock market?
Valuation puts the Shiller CAPE in context, i.e. the price divided by the average earnings of the past ten years. You see where the market stands compared with history and which returns followed similar valuations in the past.
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How it works
The ordinary price-to-earnings ratio (P/E) swings strongly with the economy: when earnings collapse in a recession, the market suddenly looks expensive. Robert Shiller therefore divides the price by the average inflation-adjusted earnings of the past ten years. This cyclically adjusted P/E is called CAPE or Shiller P/E.
With an account the tool shows the CAPE of the US stock market since 1881 with its mean, percentile (the share of months that were valued lower or the same) and z-score. The earnings yield 1/CAPE can be compared with the real yield on bonds; the gap is called the excess CAPE yield.
A regression shows which real returns followed a valuation over the next ten years. High valuations came with lower subsequent returns on average, but with a wide spread. As a signal for the next year or two the CAPE is of little use.
What a result looks like
Sample dataMade-up sample data, no real prices and no recommendation. Calculated with the same methods as the tool itself.
Inputs in this example
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Create accountShiller CAPE: Sample stock market since 1881
Dashed: mean; dotted: ± one standard deviation in the chosen period.
| since 1881 | since 1950 | since 1990 | |
|---|---|---|---|
| Mean | 20.7 | 22.0 | 24.7 |
| Median | 19.9 | 21.4 | 23.4 |
| Minimum | 12.7 (08/1941) | 12.8 (11/1981) | 16.8 (03/1995) |
| Maximum | 35.1 (11/1999) | 35.1 (11/1999) | 35.1 (11/1999) |
| Percentile today | 95% | 91% | 81% |
| z-score today | 1.88 | 1.58 | 0.99 |
| Months | 1740 | 912 | 432 |
CAPE and real return over the following 10 years p.a. (1881–2015)
Return = -4.51% + 1.84 × 1/CAPE; R² 0.36, Newey-West t-statistic of the slope 4.3.
Because the 10-year windows overlap, they amount to only about 14 independent periods. The band (10–90%) is the spread of past deviations, not a confidence interval.
Subsequent returns by valuation (10 years p.a., real)
The sample months split by CAPE into 5 equal-sized groups (ascending, cheapest at the top); ◆ marks the group of today's value.
| CAPE | Months | Mean | Minimum | Maximum | Share negative | |
|---|---|---|---|---|---|---|
| 1st quintile | 12.7–16.8 | 324 | 7.3% | 1.9% | 13.7% | 0% |
| 2nd quintile | 16.9–18.6 | 324 | 5.9% | 1.3% | 11.3% | 0% |
| 3rd quintile | 18.6–20.7 | 324 | 5.3% | -0.8% | 11.2% | 1% |
| 4th quintile | 20.7–23.5 | 324 | 3.6% | -2.1% | 9.6% | 13% |
| 5th quintile ◆ | 23.5–35.1 | 324 | 2.4% | -2.2% | 9.4% | 23% |
More metrics
From the same made-up monthly data, as of 12/2025.
The P/E based on one year of earnings swings strongly with the business cycle. That is exactly what the CAPE smooths out.
Assumptions: “Sample stock market” is entirely made up: monthly values from 1871 to 2025 for price, earnings, dividends, consumer prices and interest rates, so that the CAPE starts in 1881 as in the tool. Real returns with dividends reinvested, no costs or taxes. The fitted line uses the whole sample (with hindsight) and is not a forecast.
Frequently asked questions
What is the Shiller CAPE?
The price of a stock index divided by the average real earnings of the past ten years. Smoothing over ten years removes business cycle swings and makes valuations comparable over long periods.
Is a high CAPE a sell signal?
Not a reliable one. Historically, high valuations came with lower returns over the following ten years, but the market can stay expensive for years. The CAPE says little about the short-term direction.
Why has the CAPE mostly been above average since the 1990s?
Possible reasons are different accounting rules, a larger share of technology companies and lower payout ratios. That is why the tool compares several periods: since 1881, since 1950 and since 1990.
What is the excess CAPE yield?
The earnings yield 1/CAPE minus the real yield on 10-year government bonds. A high value means stocks offer a lot of yield compared with bonds, so they are relatively cheap. A low value rather favors bonds.
Learn more in the knowledge base
- MethodologyValuation with the Shiller P/E: methodology
- ArticleShiller P/E (CAPE): how expensive is the stock market?
- ArticleEquity risk premium: how much more equities return and why it is a puzzle
- ArticleReal return: what is left after inflation
- ArticleMarket expectations: what the yield curve, inflation-linked bonds and options reveal about the future
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