CAPE ratios by country

Where markets stand, September 2026

Taiwan is the most expensive market on this measure at 46.7, and Turkey the least at 6.8 — a spread of 6.9 to one across 28 markets. The United States stands at 35.9.

Using CAPE to estimate global stock market valuations

The idea behind the CAPE ratio is that company earnings tend to be volatile and cyclical fluctuations have a huge impact on the traditional trailing 12-month P/E ratio. Instead of using annual earnings, CAPE ratio uses the average (inflation-adjusted) earnings of the last 10 years to smoothen out any regular cyclical variations.

Professor Shiller popularized the ratio when he demonstrated the clear historical relationship between the ratio and market returns when calculated for the S&P 500 index. Multiple studies have shown that Shiller PE can be successfully applied also to global markets.

For additional information about using CAPE on a global scale, check the writings by Meb Faber. Mr. Faber’s blog covers practically everything you need to know about the ratio.

Why the ranking is the weakest use of CAPE

Comparing one market's CAPE with another's is harder than it looks, for three main reasons.

Inflation histories differ. The measure restates ten years of earnings in current money. Two markets with very different inflation over that decade are not adjusting the same quantity, and the adjustment is larger where inflation was higher.

Growth rates differ. The gap between current earnings and the ten-year average is the growth delivered over that decade. A market that has grown quickly carries a structurally higher CAPE than a slow-growing one at the same price.

Index composition differs. A market heavy in banks and miners will read below one heavy in software whatever either is worth, and CAPE does nothing to correct for that.

The comparison the measure genuinely supports is a market against its own past, which is what the range chart shows. For a cross-market comparison on firmer ground, the sector EV/EBITDA page holds the sector constant.

Valuations vs. Market Liquidity: Which Matters More?

Traditionally, the relationship between market liquidity (the availability of money) and valuations has been clear-cut. Liquidity plays a crucial role in short-term price fluctuations and overall market stability, but in the long run, stock prices are expected to align with fundamental valuations. The core belief has always been that if valuations become excessively high compared to underlying fundamentals, a correction is inevitable.

But is this long-held assumption still valid?

In today’s financial landscape, central banks are actively navigating between quantitative easing (QE) and quantitative tightening (QT), injecting or withdrawing liquidity from markets at unprecedented scales. Could it be that liquidity itself has become a primary driver of stock prices—not just in the short term, but also in the long term?

Furthermore, stock prices influence corporate behavior. A high stock price can boost confidence, encourage risk-taking, and even shape executive decision-making, potentially driving future growth and earnings. In this context, does the stock price determine a company’s success, rather than merely reflecting it?

Additionally, the rise of passive investing—where capital flows indiscriminately into stocks based on index weightings rather than fundamentals—raises another question: Are traditional valuation metrics becoming obsolete? If money flows into stocks regardless of valuation, does comparing current multiples to historical levels even make sense anymore?

We are in the midst of a massive financial experiment, where governments and central banks play an increasingly dominant role in market dynamics. The question remains: Will the old rules of investing still hold in the future, or are we entering a new era where liquidity, rather than valuations, dictates stock prices indefinitely?

Reading the range chart

A market near its own high has been more expensive on this measure only rarely in twenty or more years. That is a statement about its own history and nothing else — it is not a forecast, and a market can stay near its own high for years.

Markets near the bottom of their range deserve the opposite caution. A very wide range usually means the market once had a bubble, and that a reading in the lower third looks cheap mainly by comparison with a peak nobody expects to see again.