How Extreme is the Market’s Current CAPE

Median~16
P75~21

This week brings a public service announcement.
With the Shiller PE ratio currently over 31, what does this mean for your retirement?

While Bianco has a more conservative view of extreme (and many other economists are also quick to debate Shiller’s metric), the Shiller PE is actually at a fairly extreme level. Only in 3% of market history has the CAPE been higher.

While this certainly suggests markets are directionally high (especially for aspiring, soon-to-be early retirees), the fact that only 3% of history is available to sample from (only 53 months out of a total 1761 months of data) suggests a huge degree of uncertainty.

The “Random Walk” may be even less predictable today than usual…

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