Resolution criteria

This market will resolve to "Yes" if the Shiller P/E Ratio (Cyclically Adjusted Price-to-Earnings Ratio, or CAPE) for the S&P 500 exceeds 50.0 at any point during the market's duration, based on the official data published by Robert Shiller. The market will resolve to "No" if the ratio remains at or below 50.0 through January 1, 2030.

The primary source for resolution is the data provided at Robert Shiller’s Online Data website. Specifically, the market will refer to the "U.S. Stock Markets 1871-Present and CAPE Ratio" spreadsheet. If this data source becomes unavailable, the resolution will be based on the most widely accepted alternative index tracking the S&P 500 CAPE ratio, as reported by major financial news outlets (e.g., Bloomberg, Wall Street Journal).

Background

The Shiller P/E ratio, or CAPE, is a valuation measure usually applied to the S&P 500 equity market. It is defined as price divided by the average of ten years of earnings (moving average), adjusted for inflation. Unlike the standard P/E ratio, which uses trailing twelve-month earnings, the CAPE ratio is intended to assess valuations by smoothing out business cycle fluctuations.

Historically, the CAPE ratio has been used to estimate future returns, with higher levels typically associated with lower subsequent long-term returns. The ratio famously exceeded 44 during the peak of the dot-com bubble in late 1999. As of recent years, the market has seen extended periods of high valuation, making the historical significance of reaching a 50.0 threshold a subject of interest among market analysts and economists.

This description was generated by AI and edited by the market creator.