Robert Shiller’s Cyclically Adjusted P/E (CAPE) may be hitting its peak as stocks grow more slowly than earnings.  The ratio, now near its dot-com highs, is undoubtedly elevated but will be hard pressed to continue its climb toward dot-com era highs.  The gauge uses the index’s real price – calculated from the S&P 500’s close and adjusted for CPI – and divides by trailing 10-year real earnings to remove any economic cyclicality from the typical price/earnings ratio (which is usually based on either trailing 12-month or forward 12-month earnings). Currently, CAPE sits at 41.2x, just below the 44.2x it hit when it peaked in the dot-com era. However, market gains would need to roughly double historical norms through 2028 to keep the measure moving higher. Using today’s consensus earnings growth and inflation forecasts (EPS should average 15.4% from 2027-28) and assuming that the S&P 500 posted its average rolling 12-month gain back to 1929 (8.2%), CAPE would steadily fall to 37.5x by the end of 2028. Instead, if consensus proves correct, the S&P 500 would have to run at a 16.1% annualized clip from today for 2028 CAPE to hit the 2000 zenith – a 67th percentile return for the index back to 1929.