S&P 500 Shiller CAPE Hits 40.58, Near Dot-Com Era Valuation Levels

The S&P 500’s Shiller CAPE ratio has climbed to 40.58, pushing U.S. equity valuations into historically extreme territory.
That level is above the peaks reached in both 1929 and 2021.
The only period when the market traded at a materially higher CAPE was during the Dot-Com Bubble in 2000.
What followed was an extremely difficult decade for U.S. equities, with the S&P 500 producing weak long-term returns despite multiple major rallies along the way.
CAPE is not a reliable tool for calling short-term market tops. Expensive markets can remain expensive and continue rising for years.
Its usefulness is more about long-term expectations.
Historically, very high starting valuations have tended to be associated with lower subsequent returns, which is why many long-term forecasts now point toward single-digit annualized U.S. equity returns rather than another sustained 15% per year run.
The risk is not necessarily an immediate crash. It is that investors are already paying today for a significant portion of the growth they expect over the next decade.