S&P 500 CAPE Ratio Hits 40x, Highest Since Dot-Com Bubble
The S&P 500's cyclically adjusted price-to-earnings (CAPE) ratio has surged above 40x, marking its highest level since the 2000 Dot-Com Bubble and exceeding valuations at every major market top of the last 140 years.
The cyclically adjusted price-to-earnings (CAPE) ratio for the S&P 500 has climbed above 40x, according to data shared by @FirstSquaw. This is the highest reading since the Dot-Com Bubble peak in 2000.
Excluding that extreme, current valuations surpass every other major market top recorded over the past approximately 140 years. The CAPE ratio, developed by Nobel laureate Robert Shiller, smooths earnings over 10 years to account for cyclical fluctuations.
The elevated reading suggests stocks are historically overpriced relative to long-term earnings, a signal that has often preceded periods of lower returns.
Source: First Squawk