The Stock Market Hasn't Been This Expensive in Decades. Should Investors Prepare for a Crash?

Since it hit its trough on Oct. 12, 2022, the index is up over 91%. These gains have been rewarding, but they've also made the market expensive, which has worried some investors. The Shiller P/E ratio is one way to gauge how expensive the market is. It looks at the average inflation-adjusted earnings of S&P 500 companies over the past 10 years. Zooming out a decade and adjusting for inflation removes one-off years and provides perspective on long-term valuation trends. As of the beginning of October, the Shiller P/E ratio was 40. 7, the highest it has been since the dot-com bubble.