The market is drastically overpriced. Seems to me none of the automated trading systems can deal with negative pressures. I wonder what it will take besides increasing inflation, declining employment, increased debt loads, private lending squeeze, AI investments that will never pay off enough, and a multinational war to make the bottom drop out…?
Based on current market data for March 2026, if the S&P 500's Shiller CAPE ratio (Cyclically Adjusted Price-to-Earnings ratio) were to decrease to 25, the value of the S&P 500 would be approximately 4,233.
Calculation Details:
The CAPE ratio is calculated by dividing the current price of the index by the average of the last 10 years of inflation-adjusted earnings (E
10
).
Current S&P 500 Value: \~6,591.90
Current CAPE Ratio: \~38.93
Implied Average Earnings (E
10
):
38.93
6,591.90
≈169.33
Target Value at CAPE of 25: 25×169.33≈4,233.25
Context:
Implied Decline: A move from the current CAPE of \~38.9 to 25 would represent a 35.8% decrease in the index value, assuming the underlying 10-year average earnings remain constant.
Historical Average: While a CAPE of 25 is significantly lower than current levels, it is still higher than the long-term historical average, which is approximately 17–18 (or around 20.6 in the modern era).
Current Standing: The current reading of nearly 39 is historically elevated; the only time it was higher was during the peak of the dot-com bubble in 2000.