US stocks overvalued? Shiller PE ratio crosses 40 for only the second time in history
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓The Shiller PE ratio crossed 40 for only the second time in history as US stock prices rose faster than earnings.
- ✓The market has been bullish for three years, with the S&P 500 rising from 4,300 to 7,600.
- ✓Investors now worry if companies can maintain this growth beyond 2026.
Story at a Glance
- Category
- MARKET
- Reported By
- Financial Express
- Reading Speed
- 3 Minute(s)
- Market Focus
- India Economy
What Is the Shiller CAPE Ratio?
The P/E, or price-to-earnings ratio, is a key number many investors look at when deciding to buy or sell a stock. It compares a company’s stock price to its earnings per share. In simple terms, it shows the price investors are willing to pay for each dollar of profit.
The CAPE ratio, or Shiller PE Ratio, is different from the traditional P/E. It accounts for inflation over the past 10 years. American economist Robert Shiller developed it to check whether the market is undervalued or overvalued compared with its inflation-adjusted earnings record. The ratio works out the P/E of S&P 500 stocks while smoothing profits over the last ten years and adjusting for inflation.
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Financial Express
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