Shiller CAPE: the price of US stocks against ten years of earnings
CAPE, the cyclically adjusted P/E, divides the S&P 500 price by the average of real earnings over the last ten years. It smooths good and bad years and shows how many years of normal earnings the market pays. The average since 1881 is about 17; the record is 44 from December 1999.
History since 1881
What it says today
Above the 1929 level. Exceeded only in 1999 and in recent years. 99 % of the history sits at or below today's value.
Under fifteen times long-term earnings. The lows of 1982 and 2009.
Close to the long-term average since 1881.
The market is dearer than it used to be. Ten-year returns from here tended to be below average.
The level of 1929 and 2007. Plenty of room for disappointment.
Above the 1929 level. Exceeded only in 1999 and in recent years.
Where it stood at key moments
| Moment | Value | Band |
|---|---|---|
| Dot-com bubble peak (March 2000) | 43.2x | Very expensive |
| Post-bubble low (October 2002) | 22.0x | Above average |
| Pre-crisis peak (October 2007) | 27.3x | Expensive |
| Financial crisis low (March 2009) | 13.3x | Cheap |
| Covid crash low (March 2020) | 24.8x | Above average |
| Bear market low (October 2022) | 27.1x | Expensive |
| Today | 40.7x | Very expensive |
What it measures
The plain P/E divides price by the last twelve months of earnings, so it looks cheapest at the top of the cycle, when earnings are inflated, and dearest at the bottom, when earnings have collapsed. Shiller and Campbell proposed in 1988 to divide by the ten-year average of real earnings so the ratio speaks about a normal year rather than the current one.
Key readings: 32.6 in September 1929, 44.2 in December 1999, 27.5 in October 2007, 13.3 in March 2009, 38.6 in November 2021. Robert Shiller at Yale compiles the data from prices and earnings since 1871.
How to read it
CAPE best predicts the real return of the next ten to fifteen years: the higher the CAPE, the lower the return. The relationship is loose and says nothing about the short term. From a CAPE above 30 ten-year real returns were historically near zero; from under 15 they exceeded 10 % a year.
The inverse is more practical, the earnings yield: a CAPE of 35 means 2.9 % a year, which compares directly with the ten-year Treasury yield. When the gap is small, stocks carry little premium for their risk.
When it failed
Since 1991 CAPE has sat above its long-term average almost without interruption, 2009 excepted. Whoever sold on it in December 1996, when Alan Greenspan spoke of irrational exuberance and CAPE stood at 28, missed the doubling of the market into 2000 and another twenty years of gains.
Critics note that accounting rules after 2001 depress earnings, that the index has shifted toward high-margin companies and that low interest rates justify higher multiples. Some of that holds, but even after adjustments CAPE has not been cheap in recent years.
How to read market indicators
The seven indicators in the Indicators section say how expensive, frightened or tired the market as a whole is. What the bands mean, why none of them times the market, and how to combine them with the Fair Price Index.
Learn moreTerms in the glossary
The market as a whole is expensive. Which stocks are not?
Fair Price Index values thousands of stocks against their intrinsic value and shows which ones trade below it right now.
Open Fair Price IndexMethod and source
- Source: Robert Shiller's monthly data (Yale) as published on multpl.com; the current month is a running estimate.
- CAPE = S&P 500 price / average of real earnings over the last 120 months, both in today's dollars.
- History from January 1881; the first ten years of data from 1871 serve only to compute the average.
- Bands follow the usual split: under 15 cheap, 15 to 20 average, 20 to 25 above average, 25 to 32 expensive, above 32 very expensive.
Source: Robert Shiller (Yale) via multpl.com · Updated September 16, 2026
Frequently asked questions
Other indicators
The indicators describe the market as a whole from public data. They say where the market stands against its history, not what it does next month, and each of them has failed before. They are not investment advice. Learn more