145 years. One pattern.
The Shiller CAPE is a price check on the whole stock market: today's price against the average earnings of the past ten years, with inflation stripped out. A single boom or bust year can lie; the long average tells the truth. It was developed by Nobel laureate Robert Shiller, whose work showed how markets detach from real value — and then snap back. Every gold-dotted peak is a market convinced it was different, and every one reverted below the long-run mean. Today sits above 40, the second-highest reading on record.
Glaciers teach the same lesson: slow is not the same as still.
Valuation peaks
Euphoria stretches price past reason. That is human nature: the subject of The Long Argument.
Every reversion
Each peak fell below the mean. In four completed cycles, there were no exceptions—recorded in The Market Cycle.
Every point sourced
Each peak, trough, and today's 40 carries a primary-source citation, itemized in The Ledger.
Source: Robert Shiller (Yale), monthly Shiller CAPE; figures are real (CPI-adjusted). Shiller's underlying price, dividend, earnings, and CPI series begins in 1871; the CAPE ratio, which averages ten years of trailing real earnings, has readings only from 1881, so the record shown spans 1881–2026 (145 years). This chart is illustrative and for educational purposes only: it describes historical valuation and risk, not a forecast, a recommendation, or a guarantee of any outcome. Past performance is not indicative of future results.
The case, the proof, and the proof of the proof.
Why this is the hard part.
Two forces do most of the damage to a portfolio, and the third is what keeps most advisors from protecting you.
- 01The slow tax of inflation: cash is not safety, it is a guaranteed slow loss. The only real choice is which risk to take.
- 02Human nature that bends every cycle. Buying with the crowd at the top and selling with it at the bottom is the same failure, twice.
- 03Career risk is human nature wearing a suit. Most advisors move with the herd because being wrong with everyone is forgivable, while standing apart can easily get you fired.
- 04We own the firm and answer to you, not to career risk, so we are free to step away from the cliff.
Four cycles. One pattern.
The argument is general; history makes it specific. Since 1901, the U.S. market has completed four secular cycles.
- 01Four bulls stretched valuation to an extreme; every one reverted below the long-run mean of ~17. No exceptions in 145 years.
- 02Peaks of 25, 33, 24, and 44 fell to troughs of 5, 6, 7, and 13—real drawdowns of −60% to −81%.
- 03Each turn built the next fortune and capital positioned for the reversion compounded; capital that hoped did not.
- 04Today the CAPE sits above 40, the second-highest reading in 145 years. We are late in the open fifth cycle.
Every number, on the record.
An argument is only as good as its numbers. So we grade our own homework in public.
- 0187 quantitative claims behind the case, each cross-referenced to a primary source.
- 0276 are direct matches to public data: Shiller, the BLS, FINRA, the Federal Reserve.
- 03The remaining 11 are labeled in the open as estimates or scenarios, with the method shown for each.
- 04Most commentary asks for your trust, we would rather you check our work.
Why publish any of this? Because the stakes are yours, not ours. Read the reasoning, test it against 145 years, and audit every figure, because conviction you borrow will not hold through a drawdown. Conviction you understand will.
The documents are password-protected · access is reserved for clients and invited guests