Shiller P/E (CAPE)
Selected range · January 1957 — April 2026
About this chart
The CAPE Ratio compares the inflation-adjusted level of the U.S. stock market with the average inflation-adjusted earnings generated over the preceding ten years.
CAPE stands for Cyclically Adjusted Price-to-Earnings ratio. It is also commonly associated with economist Robert Shiller.
A conventional price-to-earnings ratio compares the current market price with earnings from a recent period. Because corporate earnings can rise or fall sharply during recessions, recoveries, and temporary business cycles, a conventional ratio may change significantly even when the longer-term valuation picture has not changed as much.
The CAPE Ratio reduces this sensitivity by averaging real earnings over ten years. Using a longer earnings period smooths short-term fluctuations and provides a more stable comparison between market prices and the earnings capacity of companies across different stages of the economic cycle.
Both the S&P 500 level and its earnings are adjusted for inflation before the ratio is calculated. This allows observations from different periods to be compared using a consistent purchasing-power basis.
The ratio rises when inflation-adjusted stock prices increase faster than the ten-year average of inflation-adjusted earnings.
A higher CAPE Ratio means that investors are paying more for each unit of smoothed real earnings than they have historically. High readings may reflect strong growth expectations, low interest rates, high investor confidence, or unusually elevated market valuations.
The ratio falls when stock prices decline, long-term average earnings increase, or both occur together.
A lower CAPE Ratio means that investors are paying less for each unit of smoothed real earnings. Lower readings may occur after market declines, during periods of economic uncertainty, or when real earnings have grown more quickly than stock prices.
The chart compares the CAPE Ratio with its arithmetic historical average.
A reading above the historical average means that the market is valued more highly relative to smoothed real earnings than it has been across the full historical sample.
A reading below the historical average means that the market is valued less highly relative to smoothed real earnings.
The deviation line expresses how far the current CAPE Ratio is above or below its historical average as a percentage.
A deviation of 0% means that the CAPE Ratio is equal to its historical average.
A positive deviation means that the ratio is above its historical average, while a negative deviation means that it is below its historical average.
The standard-deviation zones show whether the current deviation is relatively common or historically unusual. Values farther from 0% represent less common historical valuation conditions.
The CAPE Ratio is mainly a long-term valuation indicator. It may provide context about expected long-term market returns, but it is not designed to predict short-term price movements or identify the exact timing of market turning points.
Limitations
- CAPE smooths earnings over ten years, which reduces short-term volatility but can make the ratio slow to reflect recent changes in profitability.
- Historical comparisons are affected by changes in accounting standards, taxation, profit margins, sector composition, and the growing importance of intangible assets.
- The inflation adjustment depends on the selected consumer price index and may not perfectly reflect changes in companies’ costs, revenues, or investors’ purchasing power.
- The historical average and standard-deviation zones depend on the selected sample period and can be materially influenced by long-lasting valuation regimes.
- Low interest rates, changes in required returns, and structural shifts in the economy can support valuation levels that differ from earlier historical norms.
- A high or low CAPE reading is more informative about long-term valuation conditions than short-term market direction and does not provide a precise timing signal.
- An unusually high or low CAPE ratio can persist for many years and should not be interpreted as an exact fair-value estimate or a standalone investment signal.
Methodology
The CAPE Ratio is calculated by dividing the inflation-adjusted S&P 500 level by the average inflation-adjusted earnings from the preceding 120 monthly observations.
Historical S&P 500 prices and earnings are converted into real values using the Consumer Price Index. The same inflation adjustment is applied to both series, so the chosen CPI reference level changes their displayed real values but does not by itself change the resulting CAPE Ratio. For each month, the model calculates the average real earnings from the preceding 120 monthly observations. The current real S&P 500 level is divided by that ten-year earnings average. The underlying price, earnings, and CPI observations begin in January 1947. Because 120 monthly earnings observations are required, the first complete CAPE Ratio value is available in January 1957. The model calculates the arithmetic historical average of the full completed CAPE series. The standard deviation of the CAPE series is used to create the ±1σ, ±2σ and ±3σ reference levels around that average. The percentage deviation measures how far the CAPE Ratio is above or below its historical average. The z-score standardizes that percentage deviation relative to its historical variation.
Data sources
Monthly U.S. stock-market index level used as the price component of the CAPE calculation
Range: January 1947 to the latest available observation
Source: DataHub, Standard and Poor’s 500 Index Data; https://datahub.io/core/s-and-p-500
Monthly S&P market earnings used to calculate the ten-year average real earnings
Range: January 1947 to the latest available observation
Source: Robert J. Shiller, U.S. Stock Markets historical data; https://shillerdata.com/
Consumer Price Index for All Urban Consumers: All Items in U.S. City Average, seasonally adjusted
Range: January 1947 to the latest available observation
Source: U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers: All Items in U.S. City Average [CPIAUCSL], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/CPIAUCSL