ValuationRobert Shiller / YaleMonthly

Shiller CAPE Ratio (Cyclically Adjusted P/E)

What is Shiller CAPE Ratio (Cyclically Adjusted P/E)?

The Cyclically Adjusted Price-Earnings ratio (CAPE) divides the S&P 500 price by the 10-year inflation-adjusted average of real earnings. It smooths the earnings cycle to give a long-horizon valuation read.

Why it matters

CAPE is the most-cited long-horizon valuation gauge. Above-30 readings have historically been followed by below-average 10-year forward real returns. It does not time markets but anchors return expectations and rotation decisions.

How to read prints

When it rises

Equities expensive vs. 10Y real earnings; lower expected long-run returns.

When it falls

Equities cheap vs. 10Y real earnings; higher expected long-run returns.

Frequently asked

What is the Shiller CAPE?⌄
S&P 500 real price divided by the trailing 10-year average of inflation-adjusted earnings. Developed by Robert Shiller; also known as CAPE10 or P/E10.
What is a normal CAPE level?⌄
Long-run average since 1881 is ~17. Above 25 is historically expensive; above 30 has only occurred in 1929, the late-1990s tech bubble, and the post-2020 period.
Does CAPE predict returns?⌄
It correlates with 10-year forward returns (R² ~0.4) but not with 1-year returns. Useful for asset-allocation tilts, not market timing.
Why use 10-year real earnings?⌄
Trailing 12-month earnings are distorted by the business cycle. The 10-year smooth captures structural earnings power and adjusts for inflation.

Track it on Market Ontology

Monitor Shiller CAPE Ratio (Cyclically Adjusted P/E) in real time on Macro Regime, alongside regime classification, transmission mapping, and cross-asset context.

SourceRobert Shiller / Yale
FrequencyMonthly
CategoryValuation
Unitratio
Related ModuleMacro Regime

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