Shiller CAPE (S&P 500)

## What this measures

The Shiller CAPE divides the S&P 500 price by the average of ten years of inflation-adjusted earnings. It smooths short-term earnings volatility to show valuation over a full business cycle.

## Why it matters

A high ratio indicates that equity prices are elevated relative to long-run earnings power, which has historically preceded lower subsequent returns. Stewards watch it to gauge whether current valuations leave room for appreciation or signal heightened risk of mean reversion.

## How to read it

A rising CAPE means stocks are becoming more expensive relative to their trailing earnings. Compare the current level to its own history; readings well above the long-term average have often accompanied periods of stretched valuations.

## What it does not say

The ratio does not forecast near-term price moves or indicate whether a market is about to fall. It reflects valuation, not momentum or sentiment.

## Source

Palanor receives the series from the data published by Robert Shiller using his cyclically adjusted methodology.