What Do Tobin's Q and Shiller's CAPE Say About Current S&P Valuations?

[Gone4Good]

But ignoring that, there is still the question of how much stock a portfolio dependent retired person, or one who really wants to retire soon, should own with the S&P at the 80th percentile.

It looks like there were about 8 discrete times when the S&P was at or above 20.79x PE10. Here are the 10-yr CAGRs following the first instance when the benchmark crossed the 20.79x threshold . . .

1898 9.1%
1901 7.2%
1928 (1.1)%
1936 4.4%
1961 7.2%
1969 3.7%
1993 8.4%
1995 11.2%

Still looks OK relative to a 3.7% 10 year treasury yield.

And with respect to the retiree, a 4% withdrawal rate and 60/40 asset allocation survived 30 years for every one of those starting periods except 1969.

I'll leave it to someone else to figure out how a higher bond allocation would have fared in those periods.