Where Will the S&P 500 Be in 10 Years? Nobel Laureate Robert Shiller Weighs In

1 week ago 8

Adam Levy, The Motley Fool

Sun, April 12, 2026 astatine 1:40 PM CDT 5 min read

The past 10 years person been an fantabulous tally for the banal market. Despite 2 carnivore markets (2020 and 2022) and 2 astir carnivore markets (2018 and 2025), the S&P 500 (SNPINDEX: ^GSPC) has produced a full instrumentality of 282% implicit the past decade, a compound yearly instrumentality of 14.4%. That's good supra the humanities mean instrumentality for the index. The Nasdaq Composite (NASDAQINDEX: ^IXIC) has fared adjacent better, up 394% (17.3% annually), acknowledgment to the beardown show of tech stocks.

But investors ever request to beryllium looking forward. The adjacent 10 years volition surely unfold otherwise from the past 10 years. And the banal marketplace volition apt nutrient importantly antithetic returns. Nobel Prize-winning economist Robert Shiller thinks that investors should beryllium prepared for what comes aft years of exceptionally beardown marketplace performance.

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A paper with the header "Where Will The Market Go Next?"

The cyclically adjusted price-to-earnings (CAPE) ratio, developed by Shiller arsenic portion of his Nobel Prize-winning research, measures the terms of an equity (or a radical of equities) comparative to its mean net implicit the past 10 years, adjusted for inflation. The metric smooths retired economical cycles and helps nutrient amended semipermanent instrumentality estimates.

The S&P 500 CAPE ratio topped 40 earlier the extremity of past year. That's a level the scale hasn't seen since the tallness of the dot-com bubble. The scale ended the twelvemonth astatine a CAPE ratio of 39.9. After the sell-off successful the banal marketplace truthful acold this year, the CAPE ratio present sits astir 38. That's inactive 1 of the highest levels it's reached passim history.

There's an inverse narration betwixt the CAPE ratio and aboriginal semipermanent returns. The higher the CAPE ratio, the little the expected aboriginal returns. When the S&P 500 CAPE ratio peaked astatine the extremity of 1999, the adjacent decennary delivered full returns of antagonistic 9% for the S&P 500. That's what's known arsenic the mislaid decade.

Shiller sees a akin communicative playing retired implicit the adjacent decade. With scale returns driven by a fistful of stocks tied to the artificial quality (AI) story, helium expects lone a fewer survivors retired of the radical implicit the agelong run. The rest, arsenic successful the dot-com bubble, whitethorn spot a important simplification successful their marketplace worth arsenic the winners emerge. That's going to measurement importantly connected marketplace returns, conscionable arsenic it did successful the aboriginal 2000s.

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