Stocks are still expensive, though not at all time highs

According to price-to-earnings or “PE” data tracked by Yale University finance professor and Nobel Prize winner Robert Shiller, the S&P 500 is about 75% above its historic average valuation. Ten-year forward average returns fall nearly monotonically as starting Shiller P/E’s increase,” warned hedge fund manager Cliff Asness of AQR in a 2012 research paper, as he studied the S&P 500 going back to the 1920s. Also, he added, “as starting Shiller P/E’s go up, worst cases get worse and best cases get weaker.

Today’s level? Compared to history, we’re in the most expensive 10% of starting valuations, according to Asness’ data. “Average” 10-year returns from here? Based on history it’s about 0.5% a year after inflation, he calculated.

Current Shiller PE Ratio: 30.56 +0.19 (0.62%)

4:00 PM EST, Fri Feb 22

Mean:	16.61
Median:	15.70
Min:	4.78	(Dec 1920)
Max:	44.19	(Dec 1999)