What returns is today’s stock market pricing in?
At the current US CAPE of 41.4, history points to roughly -0.2% a year in real terms over the next decade — versus about 6.3% from its median valuation of 16.1. That is a central estimate with a wide band, not a forecast.
By Dominic Roe · Data Engineer & Business Intelligence Developer
Expected return over the next 10 years (annualised, real)
-0.2% / yr
Two-thirds of history landed between -4.6% and 4.1% a year.
could be worth, in today’s money, about
£9,785
in 10 years — historically anywhere from £6,254 to £15,017. Assumes dividends reinvested; in real (inflation-adjusted) terms.
Every starting month since 1881
Each dot is one month: its CAPE then, and the real return the market actually delivered over the 10 years after.
Fit: real return = 25.6% − 6.9% × ln(CAPE). R² = 0.28 over 1605 overlapping months (1881–2014). Today's CAPE as of 2026-06.
Why starting valuation matters
The price you pay sets the return you get. When you buy the market cheaply — a low CAPE — you are buying more earnings per pound, and history shows the decade that follows tends to be kinder. When you buy it expensively, future returns have usually been thinner. The relationship is loose over a year or two but strengthens over ten, which is why this calculator works on a ten-year horizon.
The line on the chart is fitted to 1605 overlapping ten-year windows from 1881 to 2014, using Robert Shiller’s real total-return series. It is the same CAPE you will find on the US CAPE page, and it feeds the cheap-or-expensive read on the US valuation dashboard.
Read this before you act on it
Valuation explains only part of long-run returns (R² ≈ 0.28). Profit margins, interest rates, accounting and sector mix all shift the “normal” range over decades, so the model can be wrong for a long time — how well CAPE actually predicts returns depends entirely on the horizon. It is a context gauge and information only — not a forecast, a timing signal, or investment advice. See the methodology for the full assumptions.
Frequently asked questions
How is the expected return calculated?
It is a regression fitted to Robert Shiller's monthly data back to 1881. For every month we measure the CAPE (cyclically adjusted P/E) and the real, dividend-reinvested return the US market actually delivered over the next ten years, then fit the line: real return = a + b × ln(CAPE). Today's CAPE is fed into that line. The exact coefficients are regenerated from the source data and shown on the chart.
How reliable is it?
Treat it as a tendency, not a forecast. Starting valuation explains only about 28% of the variation in 10-year returns (R² ≈ 0.28), so the band around the estimate is wide — historically a sixth of starting points did better than the upper figure and a sixth did worse than the lower. It is useless for timing the next year and most informative at valuation extremes.
Why real returns, and why ten years?
Real (inflation-adjusted) total return is what actually grows your purchasing power, so the figures are already in today's money and assume dividends are reinvested. Ten years is long enough for starting valuation to matter a great deal and short enough to be decision-relevant; over one or two years valuation tells you almost nothing.
Does a low expected return mean I should sell?
No. This is a valuation gauge, not advice. Expensive markets can stay expensive or grow more so for years, and the wide band means even today's high valuations are consistent with a range of outcomes. Use it as context alongside your own plan — it is information only, not investment advice.
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