The S&P 500 Is Overvalued, Expect Low 10-Year Forward Returns: Update Q1, 2021

Apr. 13, 2021 6:37 PM ET12 Comments
Georg Vrba profile picture
Georg Vrba


  • The average of S&P 500 for March 2021 is 3914. This is 1484 points higher than the long-term trend value of 2430.
  • The current percentage difference of S&P 500 level relative to the current long-term trend level is 61%, a value never exceeded in the recent past since January 2002.
  • The Shiller Cyclically Adjusted Price to Earnings Ratio (CAPE) is at a level of 35.0. That is 41% higher than its 35-year moving average (MA35), currently at 24.9.
  • The CAPE-MA35 ratio is 1.41, forecasting a 10-year annualized real return of about 4.6%. Should the CAPE-MA35 ratio increase further, then 10-year forward returns will be even lower.

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This is an update to our series of articles started in 2012 assessing market valuation and estimating forward stock market returns. The most recent previous update was for end of Q4, 2020

This article was written by

Georg Vrba profile picture
Georg Vrba is a professional engineer who has been a consulting engineer for many years. In his opinion, mathematical models provide better guidance to market direction than financial "experts." He has developed financial models for the stock market, the bond market, yield curve, gold, silver and recession prediction, most of which are updated weekly at

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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