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Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minuteThere is no reliable evidence that stock markets move on a predictable 25-year clock—or that their biggest acceleration phase must be ahead. A Federal Reserve Bank of Minneapolis staff report does describe U.S. valuation measures staying above historical norms for 25–30 years, but that is a long valuation regime, not proof of a recurring cycle or a forecast of faster gains. Strong future returns are possible; the cycle label does not establish them.
Is there really a 25-year stock-market cycle?
“Supercycle” is often used in market commentary to describe a long period of rising prices, unusually strong returns, or a major shift in market leadership. It does not, by itself, specify a consistent start date, end date, or testable rule for what prices will do next. The evidence here does not establish a fixed 25-year stock-market cycle that investors can use to predict an acceleration or a turning point.
The Minneapolis Fed’s staff report, “A Macroeconomic Perspective on Stock Market Valuation Ratios,” says traditional U.S. valuation measures have been above historical norms for 25–30 years. The report discusses possible explanations involving labor’s share of income and corporate investment. That observation describes valuation ratios over time; it does not say that markets follow a 25-year rhythm or that prices are due to accelerate after such a period.
A prolonged valuation regime can persist, change, or end in several ways: company earnings may grow into prices, valuations may fall, or both may happen together. Neither the length of a regime nor its label tells an investor when those changes will occur.
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What does CAPE measure—and what can it tell investors?
The cyclically adjusted price-to-earnings ratio, or CAPE, compares the inflation-adjusted level of the S&P 500 with the average inflation-adjusted earnings of its companies over the previous ten years. Averaging earnings across a decade helps smooth some business-cycle swings that can make a single year’s earnings unusually high or low.
In a 2017 article, “Stock Market Valuation and the Macroeconomy,” San Francisco Fed research advisor Kevin J. Lansing summarized research by John Campbell and Robert Shiller associating higher CAPE values with lower real stock returns over subsequent ten-year periods. That is a relationship observed across historical data, not a way to tell when a correction will begin or how large it will be. Lansing cautioned: “Making judgments about the appropriate level of stock prices is a difficult and often humbling endeavor.”
The same article illustrates how much valuation projections depend on the model and the data available. A model using data through 2017 Q3 accounted for 70% of CAPE’s variance over the preceding five decades and projected CAPE would reach 26.3 over the following ten years—about 13% below its then-current level. That was a model projection published in 2017, not a current estimate or forecast.
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Why can an expensive market keep rising—or fall sharply?
A stock’s return reflects more than the price investors are willing to pay for each dollar of earnings. Over time, company earnings growth and dividends contribute to returns; changes in valuation multiples can add to or subtract from them. For investments outside an investor’s home currency, exchange-rate moves also affect the return measured in that home currency.
- Earnings and cash flows: Companies that grow profits and sustain cash generation can support higher share prices. But if results fall short of what prices already assume, prices can be vulnerable even when businesses remain profitable.
- Valuation: A higher starting price relative to earnings can mean less room for further multiple expansion, and it has historically been associated with lower subsequent real returns over long periods. A high ratio alone does not set a date for a decline.
- Interest rates, inflation, and uncertainty: Changes in discount rates, expected cash-flow growth, inflation, and perceived risk can all affect the prices investors are willing to pay. These forces can change during a long market regime.
- Currency: For an investor measuring results in one currency, gains or losses in another currency can raise or reduce the return on foreign shares.
Vanguard says valuation measures tend to be poor predictors over short and intermediate periods and should not be a primary reason to change an allocation. Its June 2026 release says valuations tend to move toward average levels over horizons generally ten years or longer. Those horizons are not guarantees that valuations will revert on schedule.
High valuations can coexist with credible growth prospects. Vanguard has pointed to profitable technology leaders and innovation as factors that may partly support valuations, while also warning that stretched valuations can leave prices more exposed to recessions, geopolitical events, earnings disappointments, or investment shocks. As Vanguard puts it, “Elevated valuations alone typically don’t trigger market corrections.”
What do current valuation estimates say about U.S. stocks?
In an update released July 22, 2026, Vanguard said its model showed broad U.S. equity valuations had risen from an already elevated 99.7th percentile to effectively the highest percentile it had historically observed. The valuation observations were dated June 30, 2026; they are estimates from Vanguard’s model, not a universal measure of intrinsic value. The update also described valuations in other markets as elevated.
This is a dated valuation snapshot, not evidence that a crash or an acceleration is imminent. Vanguard’s own caution is that valuation is one component of potential returns, not a primary short-term allocation signal. The figure is also specific to Vanguard’s model and its historical comparison, so it should not be treated as a market-wide, model-independent reading.
Why do long-run return figures change with the period and region?
Historical averages can look different depending on the countries and years included. UBS’s Global Investment Returns Yearbook 2026 reports the following annualized equity returns, with results through 2025:
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| Market group and period | Annualized return | Source and qualification |
|---|---|---|
| Developed markets, since 1900 | 8.5% | UBS Global Investment Returns Yearbook 2026; long-run historical return for the period stated. |
| Emerging markets, since 1900 | 6.9% | UBS Global Investment Returns Yearbook 2026; long-run historical return for the period stated. |
| Emerging markets, 1960–2025 | 10.9% | UBS Global Investment Returns Yearbook 2026; return for this later starting period. |
| Developed markets, 1960–2025 | 9.6% | UBS Global Investment Returns Yearbook 2026; return for this later starting period. |
The comparison changes when the starting year changes: developed markets led the since-1900 comparison, while emerging markets led from 1960 through 2025. Neither record identifies which group will lead next. Returns also need to be considered alongside inflation and risk: UBS reports that U.S. inflation averaged 2.9% per year since 1900, a reminder that nominal gains do not equal increases in purchasing power.
UBS’s 2026 yearbook summary says U.S. equities represented 62% of global equity market value in its snapshot. That market-capitalization share is not a forecast of future leadership. Vanguard’s separate outlook has said non-U.S. shares may outperform over the coming decade, while acknowledging a meaningful chance that U.S. shares will outperform instead. That is Vanguard’s probabilistic house view, not a settled consensus.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What would make a future acceleration more than a cycle story?
A convincing case for faster future equity gains would rest on evidence that companies can deliver more than markets have already priced in—not on the age of a bull market or valuation regime. Useful signs to examine include:
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- Realized productivity gains: New technology or investment would need to translate into durable improvements in output or efficiency, not just optimistic expectations.
- Sustained earnings and cash-flow growth: Companies would need to convert growth into profits and cash flows over time.
- Valuations consistent with delivered growth: Strong results matter to investors, but returns also depend on the price paid for them. If prices assume more growth than companies deliver, valuations can weigh on returns.
- Evidence across markets: A broadening of opportunity may affect a portfolio differently from gains concentrated in a small group of large companies or in one country.
These are conditions to monitor, not a checklist that can confirm a supercycle in advance. Even a compelling growth story can be accompanied by disappointing investment returns if expectations are too high or risks change.
How should investors respond to the possibility of a long boom?
For personal investors, a cycle label is a weak basis for deciding when to buy, sell, or shift a portfolio. Valuations can help set expectations for long-run returns, but Vanguard warns against using them as the main reason to alter an allocation over shorter horizons. Concentrated market leadership can also make diversification more difficult: UBS reports rising concentration and correlations, while its historical summary says global diversification and balanced stock-bond portfolios have continued to reduce risk and drawdowns.
Global diversification does not promise that every region will perform well at the same time, and it cannot eliminate losses. It does reduce dependence on any single market or outcome. As Mark Haefele, UBS Global Wealth Management’s chief investment officer, said in the March 3, 2026 release accompanying the yearbook: “History continues to show the importance of diversification, disciplined asset allocation and maintaining a long-term perspective.” For a household, the practical choices still depend on its time horizon, capacity for loss, and need for accessible cash.
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