Core Viewpoint - The Shiller P/E ratio has surged to its highest levels since the dot-com bubble, indicating that stocks are currently the most expensive they have been in 25 years [1][2]. Group 1: Shiller P/E Ratio Insights - The S&P's Shiller P/E ratio crossed 40 for the first time since 2000, when it reached a record 44, which preceded a 49% crash in the benchmark stock index [2][7]. - The Shiller P/E ratio and other valuation measures are in the top 10% of their historic ranges, suggesting that the US equity market appears expensive relative to its historical performance [3]. Group 2: Historical Context and Predictions - The Shiller P/E ratio was developed by Nobel Prize-winning economist Robert Shiller, who accurately predicted the dot-com bubble and the housing market collapse [4]. - Historical data indicates that US stock returns have been modest to disappointing when trading at similar Shiller P/E multiples as observed currently [3]. Group 3: Calculation Methodology - The Shiller P/E ratio is calculated by dividing a stock index's point value by the combined inflation-adjusted EPS of its constituent companies over the last 10 years, providing a real average figure [5]. - For example, if the S&P 500 is at 6,700 points and its average inflation-adjusted EPS over the last 10 years is $167, the resulting multiple is 40 [6].