Commentary

Is CAPE fear warranted?

This vaunted valuation metric is useful, but it’s not destiny.

By: Denise Chisholm

Updated: 11/20/2025

Key Takeaways

Denise Chisholm approaches her research by looking at market data through a historian's lens. She believes historical patterns, when considered in the appropriate context, can help investors build conviction about future trends. This month, Denise looks at how high CAPE ratios don’t guarantee weak long-term returns—historically, crises have mattered more than valuations, and today’s elevated CAPE reflects structural shifts in the market.

Get the full white paper

Is CAPE fear warranted?

Next steps to consider

Outsourced CIO

Explore outsourced CIO solutions tailored to your needs, powered by Fidelity’s deep investment capabilities and proprietary research.

Learn more

Sector Industry

Sector/Industry

Target specific segments of the economy with our full spectrum of sector funds, ETFs, and other solutions.

Learn more

Domestic Equity

Target your clients’ investment needs with our broad lineup of domestic equity solutions.

Learn more

Related insights

View all

Is CAPE fear warranted?

This vaunted valuation metric is useful, but it’s not destiny.

Quarterly Sector and Investment Research Update

Make informed decisions with comprehensive, data-driven investment research from Fidelity's Quantitative Market Research Team.

Q4 2025 Quarterly Sector and Investment Research Update

Read the full report for current views on market trends and sector investing for the quarter.

For important information, see the full linked content.

1234060.1

9606F1C06FF24373BB6FCCD32CE12594

Past performance is no guarantee of future results.

Unless otherwise expressly disclosed to you in writing, the information provided in this material is for educational purposes only. Any viewpoints expressed by Fidelity are not intended to be used as a primary basis for your investment decisions and are based on facts and circumstances at the point in time they are made and are not particular to you. Accordingly, nothing in this material constitutes impartial investment advice or advice in a fiduciary capacity, as defined or under the Employee Retirement Income Security Act of 1974 or the Internal Revenue Code of 1986, both as amended. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in the products or services and may receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services. Before making any investment decisions, you should take into account all of the particular facts and circumstances of your or your client's individual situation and reach out to an investment professional, if applicable.

Registered investment products (including mutual funds and ETFs) and collective investment trusts managed by Fidelity Management Trust Company (FMTC) are offered by Fidelity Distributors Company LLC (FDC LLC), a registered broker-dealer. Fidelity Institutional Asset Management (FIAM) investment management services and products are managed by the Fidelity Investments companies of FIAM LLC, a U.S. registered investment adviser, or Fidelity Institutional Asset Management Trust Company, a New Hampshire trust company. FIAM products and services may be presented by FDC LLC, a non-exclusive financial intermediary affiliated with FIAM and compensated for such services.

Before investing have your client consider the funds', variable investment products', exchange-traded products', or 529 Plans' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or a summary prospectus, if available, or offering statement containing this information. Have your client read it carefully.

The use of the term "advisor(s)" throughout this site shall refer to both investment advisors and broker dealers as a collective term.