Money For the Rest of Us · Wednesday, October 21, 2026
The host notes that the trailing price-to-earnings ratio for U.S. stocks stands at 25.4, while the Shiller PE or CAPE ratio is significantly higher at 40.7, representing one of its most expensive levels in history. The discrepancy arises because the Shiller PE uses a smoothed real earnings measure over the past decade, whereas the trailing PE benefits from exceptionally strong earnings growth over the past year.
“One is based on trailing 12-month earnings, and that's at 25.4. The other is the Shiller PE, or the cyclically”
“When the Shiller PE has been this expensive, 40.7, the real return over the next decade's been zero.”