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Stock Market Valuation Perspectives

Steve LeCompte | | Posted in: Equity Premium, Fundamental Valuation

Guide Market Indicators Valuation

Key Insight

The S&P 500 index level appears to outrun its operating earnings and dividends, and the Shiller-style smoothed earnings yield shows a downward linear trendline with high variability (quarterly S&P 500 data Mar 1988–Sep 2025; Shiller series through Nov 2025; descriptive; not a trading test).

Is U.S. equity market valuation outrunning its productive value? For perspective, we compare the trajectories of S&P 500 (SP500) index, earnings and dividends over recent decades and look at some potential explanations for divergences. Using quarterly SP500 data and 10-year U.S. Treasury note (T-note) yield during March 1988 through September 2025 and Shiller data as available through November 2025, we find that:

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Market Indicators guide

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Further Reading

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