Looking Back to 1880, Stocks Are Pricey. How They Keep Climbing.

The Shiller cyclically adjusted price-to-earnings (CAPE) ratio is a valuation measure that divides a stock’s current price by the average of the last 10 years’ inflation-adjusted earnings. This tactic is a better way to assess sustainable earnings power than the typical price-to-earnings ratio, since that only takes one year into account, he wrote in a Friday note. The S&P 500’s current Shiller CAPE ratio is at roughly 40 times.