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🇺🇸 US Valuation
🌍 Global Valuation
US markets are significantly more expensive than the rest of the world. The S&P 500 trades at 28.8× earnings vs. MSCI Emerging Markets at 16.4× and Europe at 18.7×. Investors can find meaningfully cheaper valuations in international diversification — though US risks (tariffs, dollar strength) can still transmit globally.
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All Indicators Summary
| Indicator | Current | Historical Avg | Danger Zone | Premium to Avg | Signal |
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What Each Indicator Means
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What is the S&P 500 PE Ratio?
The S&P 500 PE ratio (price-to-earnings ratio) divides the index price by the trailing 12-month earnings of its 500 constituent companies. Historically the long-run average is around 16×. When the PE ratio rises well above that — as it has today at 28.8× — it signals the market may be overvalued relative to earnings. A high PE ratio does not predict exactly when a crash will happen, but it does reduce the expected future returns from equities.
What is the Shiller CAPE Ratio?
The Shiller CAPE ratio (Cyclically Adjusted Price-to-Earnings) was developed by Nobel Prize-winning economist Robert Shiller. It divides the market price by the average of 10 years of inflation-adjusted earnings, smoothing out short-term profit swings. The current CAPE of 38.93 has only been exceeded during the 1999–2000 dot-com bubble, making it one of the most concerning valuation signals in market history.
Is the Stock Market Overvalued in 2026?
By most historical measures, yes — US equities are significantly overvalued in 2026. The Buffett Indicator (total US market cap divided by GDP) sits at 217%, far above the 150% danger threshold. The S&P 500 trades at a 76% premium to its 20-year average PE. However, global markets are considerably cheaper: Europe trades at 18.7× and Emerging Markets at 16.4× — offering better relative value for internationally diversified investors.