Since 1871 the S&P 500’s Shiller P/E ratio has topped 30 only six times, each prior episode ending in a major market decline, and it now sits near 42, a level historically linked to downturns.
The article notes that the S&P 500’s Shiller (CAPE) price‑to‑earnings ratio, which averages inflation‑adjusted earnings over ten years, has exceeded 30 on six occasions since January 1871. The previous five peaks – in 1929, 1999‑2001, 2017‑2018, 2019‑2020, and 2020‑2022 – were each followed by substantial market losses, ranging from a 20% drop in the Dow to a 78% plunge in the Nasdaq.
As of the September 15, 2026 close, the CAPE ratio was reported at almost 41, with a peak of 42.84 on June 1, 2023. The article highlights that this valuation level is historically associated with “premium valuations” that are unsustainable over an extended period and have a track record of preceding declines of 20% or more.
The piece also records that the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite had gained 8.4%, 10.8%, and 11.8% respectively through mid‑September 2026, marking a fourth consecutive year of bull‑market growth. It cautions that despite the strong performance, headwinds such as high margin debt, elevated inflation, and rising U.S. debt could challenge the market.
The article does not predict a specific outcome for the current market; it only states that the historical relationship between high CAPE ratios and later market corrections suggests heightened risk, leaving the future direction uncertain.