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The S&P 500 Shiller P/E ratio stood at 41.67 as of the October 5 closing bell, placing the benchmark within striking distance of its all-time high of 44.19 set in December 1999.
This valuation level represents the highest premium in the index's roughly 156-year history, a period for which the Cyclically Adjusted P/E Ratio has been backtested to January 1871.
While the average Shiller P/E over this span is 17.42, current levels suggest a market trading at a significant premium to historical norms.
Historical precedent indicates that extreme valuations often precede significant market downturns.
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