Stocks Near the Endgame, Shiller Edition

There are many ways to value stocks.

Earnings are a great way to cut through the noise of revenues, sales, customer growth, and other metrics that may work for some industries but not others.

Value investors focus on PE ratios. Today, the S&P 500 P/E ratios are nearing historic highs, which is cause for some concern.

The Shiller PE ratio uses a metric that adjusts earnings based on economic cycles, or the CAPE ratio.

Using that metric, the S&P 500 has a Shiller PE ratio of over 40 today – a level only ever seen before in 1999.

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Today’s Shiller PE ratio is higher than the 1929 peak for stocks, and 2021’s peak before the 2022 bear market. (Source: Multpl)

This high level still has some room to go before topping the dotcom peak. But not much. Markets remain priced for perfection – and in the next few months may go past perfection.

Should any narrative slow the AI growth story, stocks are setting up for a quick dive. If you’re invested in index funds, be aware that “prices to perfection” means exactly that: everything has to go according to plan to keep your money growing in this market.

~ Addison

P.S. While the stock market is priced for perfection, commodities still aren’t. Gold is well over $3,700 per ounce, but has only just broken to new inflation-adjusted highs in the past few weeks. Silver has topped $44 overnight, looking to retest its old highs at $48.

Plus, commodities such as uranium are breaking out after consolidating over the summer, and copper remains near highs. There’s still room for the commodity space to run.

This week on Grey Swan Live!, Portfolio Director Andrew Packer and contributor Shad Marquitz will review the latest developments in the commodity space and determine the best commodity plays through the end of 2025 and into 2026.

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If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

There are many ways to value stocks.

Earnings are a great way to cut through the noise of revenues, sales, customer growth, and other metrics that may work for some industries but not others.

Value investors focus on PE ratios. Today, the S&P 500 P/E ratios are nearing historic highs, which is cause for some concern.

The Shiller PE ratio uses a metric that adjusts earnings based on economic cycles, or the CAPE ratio.

Using that metric, the S&P 500 has a Shiller PE ratio of over 40 today – a level only ever seen before in 1999.

Turn Your Images On

Today’s Shiller PE ratio is higher than the 1929 peak for stocks, and 2021’s peak before the 2022 bear market. (Source: Multpl)

This high level still has some room to go before topping the dotcom peak. But not much. Markets remain priced for perfection – and in the next few months may go past perfection.

~ Addison

Plus, commodities such as uranium are breaking out after consolidating over the summer, and copper remains near highs. There’s still room for the commodity space to run.

Turn Your Images On

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

The stock market “rebalancing” is a polite way to put it. Energy and health care are getting a healthy boost. But tech hardware and software makers are still getting dressed down and have been asked to report to the principal’s office.

The great rotation underway has triggered a series of “Hindenburg Omens.” Five have occurred in recent weeks.

The S&P 500 has traded in a 3.7% range over the past two months — less than half the 20-year median of 8.6%. One of the tightest ranges in modern history.

In trader parlance, the indexes are “flat,” a setup that often materializes before a sell-off at the top after a multi-year bull market.

Goldman Sachs told its own traders to be aware that institutional trading activity resembles a VIX reading near 35. Rather than a reading of 20, where the VIX has been trading over that same 2-month period.

The U.S. software ETF, IGV, tested its April 2025 lows last week and trades roughly 35% below its peak. The “SaaS-pocalypse” in software companies reflects the fear of Citrini’s 2028 scenario happening in real time. That divergence now exceeds the spread seen at the peak of the Great Financial Crisis.

Under the surface, the “great rotation” we wrote about last week is threatening to widen.

Despite its overly-educated 40-million-plus population, on a GDP per capita basis Canada is null. Collectively, the Great White North would rank as America’s second-lowest state, coming in above Mississippi, but below Alabama.

SpaceX is the most valuable private startup in history — and if its success continues, it might become the most valuable public company in history.

After all, as Musk famously said in 2023, “I have never lost money for those who invest in me and I am not starting now.”

For investors, SpaceX has been a wild, joyful ride — and now the journey continues!

The great rotation underway has triggered a series of “Hindenburg Omens.” Five have occurred in recent weeks.

The S&P 500 has traded in a 3.7% range over the past two months — less than half the 20-year median of 8.6%. One of the tightest ranges in modern history.

In trader parlance, the indexes are “flat,” a setup that often materializes before a sell-off at the top after a multi-year bull market.

Under the surface, the “great rotation” we wrote about last week is threatening to widen.

SpaceX is the most valuable private startup in history — and if its success continues, it might become the most valuable public company in history.

After all, as Musk famously said in 2023, “I have never lost money for those who invest in me and I am not starting now.”

For investors, SpaceX has been a wild, joyful ride — and now the journey continues!