Shiller P/E Hits 41.72, Closing on 44.19 Dot-Com Peak
Updated
Updated · The Motley Fool · Jul 5
Shiller P/E Hits 41.72, Closing on 44.19 Dot-Com Peak
1 articles · Updated · The Motley Fool · Jul 5
Summary
The S&P 500’s Shiller P/E ended June at 41.72, about 140% above its 155-year average of 17.4 and among the highest readings since records began in 1871.
That valuation is only 3.5% below the dot-com era peak of 44.19, and readings above 41 have appeared just twice before, making the current bull market the second-priciest on record.
History tied to such extremes is grim: the Shiller P/E has topped 30 six times, and the previous five episodes were all followed by declines of 20% or more in major U.S. indexes.
The warning comes after a 3.5-year rally driven by AI enthusiasm, stronger-than-expected earnings, stock-split excitement, major IPOs and record S&P 500 buybacks in 2025.
Longer-term data still favors staying invested: Bespoke found average bull markets last 1,023 days versus 286 for bears, while Crestmont showed positive annualized S&P 500 returns in all 107 rolling 20-year periods.
Is the century-old wisdom of long-term investing still valid when facing unprecedented market highs and economic uncertainty?
With market valuations nearing dot-com levels, is the AI revolution creating a new economy or just another historic bubble?
Can the new Fed Chair's dovish stance defy rising inflation, or will his policies inevitably trigger a market correction?
Record S&P 500 Valuations in 2026: Shiller CAPE, AI Concentration, and Investor Strategies
Overview
As of July 2026, the S&P 500 reached a record high of 7,502.5, reflecting a sustained rally in U.S. equities. This strong performance was driven by robust corporate earnings and major advancements in artificial intelligence, especially in May. Despite ongoing geopolitical tensions between Iran and the U.S. and disruptions in the Strait of Hormuz, the market showed resilience. Key AI-related deals further fueled investor optimism, even as mixed macroeconomic data and inflationary pressures emerged. Overall, the market’s upward momentum was supported by both strong business fundamentals and significant developments in the AI sector, despite a challenging global backdrop.