Shiller P/E calculator
The Shiller P/E, also called the CAPE ratio, is one of the best-known measures of how expensive the share market is. This calculator shows where it sits today and what investors went on to earn when they bought at different P/E levels, using US market history back to 1881.
What is the Shiller P/E?
A normal P/E compares a share price with one year’s earnings. Earnings swing a lot through good and bad years, so Professor Robert Shiller’s version compares the price with the average of the last 10 years of earnings, adjusted for inflation. That smooths out the business cycle and gives a steadier read on whether the market is cheap or expensive.
What a high P/E has meant for returns
Buying when the market was expensive has, on average, been followed by lower returns over the next decade or two, and buying when it was cheap by higher ones. Use the table to compare 5, 10, 15 and 20-year results by starting P/E. The “few” labels matter: the most expensive levels have very little history behind them.
What it can’t tell you
The Shiller P/E has never been a timing signal. The market can stay expensive for years and keep rising. It passed its 1929 peak in 1997, and prices kept climbing for more than two years after that. Investors who sold early missed that growth. A high reading says expect lower returns over the long run, not that a fall is coming soon.
So what should you do with it?
For most people, the useful lesson is about expectations and spread, not timing. If the US market is expensive, it’s a reason to check you’re diversified across countries and asset types, and to be realistic about future returns in your planning. It isn’t a reason to sit in cash. The market timing calculator shows what waiting for a better moment has historically cost.
What this calculator doesn’t include
It uses the US market in US dollars, with no fees or tax, and only lump sums held for the full period. It’s general information about what has happened, not a prediction or personal advice.
Wondering whether now is the time to invest a lump sum, or how much risk suits you? I’m a fee-only adviser. I don’t sell investments or earn commission, so the advice is about what’s right for you. Get in touch