What is a good Shiller CAPE ratio?

The long-run average Shiller CAPE is about 17. Readings above ~25 are historically expensive and readings above ~30 have typically preceded weak 10-year forward returns. There is no single "safe" number, but lower is cheaper.

What CAPE level preceded past crashes?

CAPE peaked near 44 in December 1999, just before the dot-com crash — its highest reading ever. It stood around 33 before the 1929 crash and climbed back into the high 30s in 2021.

Is CAPE the same as the PE 10 ratio?

CAPE, PE 10, and the cyclically adjusted price-to-earnings ratio are three names for the same metric: the S&P 500 price divided by its average inflation-adjusted earnings over the previous ten years.

Does a high CAPE mean a crash is coming?

A high CAPE says future returns are likely to be below average over the next decade; it is a poor timing tool for the next few months. Markets can stay expensive for years before reverting.

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Shiller CAPE ratio

Price divided by 10-year average, inflation-adjusted earnings.

41.64×

Strongly Overvalued

As of July 8, 2026

The Shiller CAPE ratio is 41.64× as of July 8, 2026 — 3.2 standard deviations above its historical mean of 17.40, a Strongly Overvalued reading.

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Historical crashes marked on this chart (8)

The dashed red lines flag major US market crashes within this indicator’s history. Here is what happened at each and what followed.

Great Depression crash (1929): Wall Street's October 1929 collapse ended the Roaring Twenties boom. Stocks lost roughly 89% of their value by 1932, and the economy sank into the decade-long Great Depression.
1937 recession (1937): After a strong recovery, premature fiscal and monetary tightening triggered a sharp 1937–38 downturn. The market fell about 50% and unemployment spiked again before wartime spending revived growth.
Kennedy Slide (1962): A rapid spring 1962 sell-off (the 'Flash Crash of 1962') wiped roughly 27% off the S&P 500 amid fears over the economy and a clash with steelmakers. Markets stabilized and recovered within about a year.
1973–74 oil crisis bear market (1973): The OPEC oil embargo, Watergate, and stagflation drove a roughly 48% decline over nearly two years — the worst bear market since the 1930s. Stocks took years to recover in real terms.
Black Monday (1987): On October 19, 1987 the Dow fell 22.6% in a single day — the worst one-day drop in history — driven partly by program trading. The economy avoided recession and markets recovered within two years.
Dot-com crash (2000): The tech bubble burst in March 2000; the Nasdaq lost about 78% by 2002 as internet valuations collapsed. A mild recession followed and tech stocks took roughly 15 years to reclaim their peak.
Global Financial Crisis (2008): The subprime mortgage meltdown and Lehman Brothers' collapse cut the S&P 500 about 57% into March 2009. It triggered the Great Recession, sweeping bailouts, and a decade of near-zero interest rates.
COVID crash (2020): Pandemic lockdowns caused the fastest bear market ever in February–March 2020, a roughly 34% plunge in weeks. Unprecedented Fed and fiscal stimulus sparked a rapid recovery to new highs.

Overview

The Shiller CAPE ratio — also known as CAPE, PE 10, or the cyclically adjusted price-to-earnings ratio — compares the price of the S&P 500 to the average of its inflation-adjusted earnings over the previous ten years. Developed by Nobel laureate Robert Shiller, it smooths earnings across a full business cycle to strip out the boom-and-bust swings that distort a simple P/E, making it the most-watched long-run valuation gauge for the US stock market. Its long-run average is about 17; it reached a record ~44 before the 2000 dot-com crash and about 33 before the 1929 crash.

How to read it

The historical average is about 17. Below ~15 has generally been cheap; the mid-20s and up is expensive; above ~30 has historically meant weak returns over the following decade. CAPE is a valuation gauge, not a market-timing signal — it says a lot about the next ten years and very little about the next ten months.

How it's calculated

Take the real (inflation-adjusted) earnings of the S&P 500 for each of the last 10 years and average them.
Divide the current real price of the index by that 10-year average earnings figure.
The result is compared against its own long-run history — the mean is roughly 17, and readings above ~30 have historically preceded weak decade-ahead returns.

Criticisms

Accounting standards for earnings have changed over the decades, arguably raising the 'fair' CAPE over time.
Persistently low interest rates can justify a structurally higher CAPE, so mean reversion can take many years.

Frequently asked questions

What is a good Shiller CAPE ratio?: The long-run average Shiller CAPE is about 17. Readings above ~25 are historically expensive and readings above ~30 have typically preceded weak 10-year forward returns. There is no single "safe" number, but lower is cheaper.
What CAPE level preceded past crashes?: CAPE peaked near 44 in December 1999, just before the dot-com crash — its highest reading ever. It stood around 33 before the 1929 crash and climbed back into the high 30s in 2021.
Is CAPE the same as the PE 10 ratio?: CAPE, PE 10, and the cyclically adjusted price-to-earnings ratio are three names for the same metric: the S&P 500 price divided by its average inflation-adjusted earnings over the previous ten years.
Does a high CAPE mean a crash is coming?: A high CAPE says future returns are likely to be below average over the next decade; it is a poor timing tool for the next few months. Markets can stay expensive for years before reverting.