Long-Term Perspective On the Stock Market

Yale professor Robert Shiller was one of a relative handful of stock-market observers who warned that the bull market of the late 1990s was a colossal bubble in the making. Shiller's book, Irrational Exuberance, was published moments before the 2000 top, and it foretold much of the carnage that was to come.

Broad market indicators like the S&P500 have been making all-time nominal highs. What's the significance of that for investors and the economy?

We have had 5.8%/year real returns on the S&P since the fall of 1995. Not one of my best… What Will the Stock Market Do? (10/17/1995):

By Zacks Investment Research: Yale Professor Robert Shiller's price/earnings ratio is getting fresh press these days. U.S. stock markets (SPY, QQQ, DIA) have all hit multi-year highs.

MyPlanIQ submits: Yale Professor Robert Shiller has devised and maintained his Cyclically Adjusted Price Earning ratio (CAPE10) as an alternative to the P/E ratio to value the U.S. stock market.CAPE10 is defined as the ratio of price to the average of the last 10-year trailing S&P 500 annual earnings.