Overview
- YCharts data cited by Yahoo Finance show the S&P 500's cyclically adjusted price-to-earnings ratio reached about 41 on June 21, 2026, well above its long-run average of roughly 17–18.
- The CAPE was developed by economist Robert Shiller and divides the current S&P 500 price by average inflation-adjusted earnings over the prior 10 years to smooth business-cycle swings.
- Historically, sustained CAPE readings above roughly 25–30 have often been followed by weaker returns over multiple years, making the current level a warning flag for investors.
- Other market measures reported earlier in June, including record margin debt, low consumer sentiment in May, and rapidly rising inflation, add to concerns that downside risk has grown for buyers today.
- The CAPE cannot predict short-term timing and markets can remain expensive for long stretches, but its current extremity means investors face higher odds of losses and should weigh leverage, time horizon, and portfolio diversification.