The Shiller P/E Is Screaming — And the IPO Market May Be Telling Us Who Is Selling

Every cycle has a number investors learn to ignore at the worst possible time.

In 1999, it was screaming.

In 2021, it was dismissed.

In 2026, it is back near historic extremes.

That number is the Shiller P/E, also known as the CAPE ratio — the cyclically adjusted price-to-earnings ratio.

And right now, it is telling investors something uncomfortable:

The market is not cheap. It is not fairly valued. It is not even mildly expensive.

It is priced for a near-perfect decade.

As of the U.S. close on June 16, 2026, Multpl shows the S&P 500 Shiller P/E at 41.92. Other providers differ slightly — GuruFocus shows the CAPE around 40.72 for June 2026 — but the message is the same: U.S. equities are trading at one of the richest valuation levels in modern market history.

For context, Multpl lists the long-term average Shiller P/E at 17.39, the median at 16.10, and the all-time peak at 44.19 in December 1999.

That is the dot-com bubble neighborhood.

But the most interesting part is not simply that the market is expensive.

Investors already know that.

The more interesting part is that this valuation warning is arriving at the same time as something else:

The IPO window is reopening.

And when valuations are stretched, risk appetite is high, and private companies suddenly regain access to public-market liquidity, stock pickers need to ask a simple question:

Are we being offered opportunity — or inventory?

Because IPOs do not only tell us what investors want to buy.

They also tell us what insiders want to sell.

What the Shiller P/E Actually Measures

The normal P/E ratio compares today’s price to the last year’s earnings. That can be useful, but it can also be misleading.

Earnings collapse during recessions. They spike during booms. They are distorted by margins, accounting changes, write-offs, buybacks, and temporary shocks.

The Shiller P/E tries to smooth that out.

It divides the S&P 500 price by the average inflation-adjusted earnings of the previous 10 years. In plain English, it asks:

How much are investors paying today for a decade of real earnings power?

That is why the Shiller P/E is also called the cyclically adjusted P/E ratio, or CAPE.

Robert Shiller’s long-run market dataset goes back to the nineteenth century and is available through his Yale online data page. That long history is what gives the metric its power. It allows investors to compare today’s valuation not just with the last cycle, but with more than a century of market regimes.

CAPE is not built for traders.

It will not tell you where Nvidia trades next week. It will not predict the next Fed decision. It will not tell you whether the next CPI print causes a one-day rally or selloff.

But it does something arguably more important:

It tells you how much future return has already been pulled into today’s price.

The Setup Investors Should Not Ignore

A CAPE near 42 does not mean the market has to crash tomorrow.

Markets can stay expensive. Expensive markets can get more expensive. Momentum can overpower valuation for longer than disciplined investors expect.

But valuation still matters.

Historically, elevated valuation levels have been far more useful for thinking about long-term forward returns than for timing short-term market moves. Campbell and Shiller’s work on valuation ratios found that these ratios were not especially useful at forecasting future earnings or dividend growth, but they were useful in forecasting future stock price changes over longer horizons. Their paper, “Valuation Ratios and the Long-Run Stock Market Outlook,” remains one of the core references behind the CAPE debate.

That distinction matters.

The Shiller P/E is not a countdown clock.

It is a gravity reading.

And right now, gravity is heavy.

At the same time, the IPO market is suddenly interesting again. According to Renaissance Capital’s 2026 IPO market stats, there have been 73 U.S. IPOs priced year-to-date, down 18.9% from the prior year, but total proceeds have reached $110.9 billion, up 667.8% year-over-year.

That is the key detail.

The IPO market is not necessarily euphoric because hundreds of tiny companies are listing.

It is euphoric because the deals that are getting done are enormous.

The clearest example is SpaceX. Reuters reported that SpaceX first raised a record $75 billion in its IPO at $135 per share, valuing the company at roughly $1.77 trillion. After underwriters exercised the greenshoe option, Reuters later reported that total IPO proceeds rose to $85.7 billion. The deal became the largest IPO in history before the greenshoe was even exercised.

This is not a normal IPO market.

This is a liquidity event on an institutional scale.

And that is where the uncomfortable question begins.

The market does not have to collapse from here. In fact, it may not. Expensive markets can always become more expensive.

But when public-market investors are willing to pay one of the highest valuation multiples in history, and private owners are suddenly able to sell giant blocks of equity into that demand, stock pickers should slow down.

The question is not whether every IPO is bad.

The question is whether the public market is once again becoming the exit door for smart money.

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