S&P 500 CAPE Ratio Tops 40 for 3 Months, Echoing 2000 Bubble
Updated
Updated · Yahoo Finance · Jul 31
S&P 500 CAPE Ratio Tops 40 for 3 Months, Echoing 2000 Bubble
2 articles · Updated · Yahoo Finance · Jul 31
Summary
Three straight months above 40 have pushed the S&P 500’s CAPE ratio into territory seen only once before in more than a century of data.
That lone precedent was the dot-com bubble, when the S&P 500 later fell nearly 50% from March 2000 to October 2002 after valuations outran profits.
The CAPE ratio divides the index by 10 years of inflation-adjusted earnings, making it a smoother valuation gauge than a standard P/E and highlighting how persistently expensive stocks have become.
Today’s setup still differs from 1999 because market leadership rests with highly profitable giants such as Microsoft, Nvidia, Alphabet and Amazon rather than largely unprofitable internet startups.