S&P 500 CAPE Crosses 40 for First Time Since 1999 as Index Doubles From 2022 Low

3 articles · Updated · The Motley Fool · Jun 16

The Shiller CAPE ratio moved above 40 last month, a threshold the S&P 500 had reached only once before in 150 years of data—during the 1999 dot-com bubble.
That reading follows a powerful rally: the S&P 500 has surged about 104% since fall 2022 and 17% since late March, while the Nasdaq-100 is up 173% and 29% over those periods.
The metric compares the S&P 500 with 10 years of inflation-adjusted earnings, and historically higher CAPE levels have pointed to weaker long-term returns rather than a precise crash date.
Today differs from 1999 because many AI leaders are highly profitable with strong balance sheets, but the report argues valuations still look unsustainable and increasingly vulnerable to a correction.

Sources

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The Motley Fool20h ago

CAPE Ratio Crosses 40, First Time Since 1999 Dot-Com Bubble

AOL20h ago

The Stock Market Just Passed a Threshold It's Only Crossed Once in 150 Years. Don't Ignore History. - AOL

Facebook20h ago

Some analysts are sounding the alarm that the AI bubble may be approaching its peak. And the parallel they are drawing is one of the most painful in market history. In 1999

Is the AI revolution strong enough to justify market valuations that history warns are unsustainable?

Beyond tech, which industries offer the safest harbor if the AI investment boom turns into a bust?

With traditional portfolios failing, what alternative strategies can protect wealth from a major market correction?

S&P 500 CAPE Ratio Surpasses 40: Historical Warnings, AI Hype, and Investor Strategies for 2026

Overview

In May-June 2026, the S&P 500’s Shiller CAPE ratio surged past 40, reaching about 41.6—a level seen only twice before, in 1929 and 1999. Both previous times, this extreme overvaluation was followed by severe market crashes, including the Great Depression and the dot-com bust. The current high CAPE signals a rare and risky period for investors, as history shows that such elevated valuations often come before significant market corrections. This pattern highlights the importance of understanding market risks when valuations reach these historic extremes.

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