GuruFocusHigh stock valuations can be a foreboding signal for long-term returns. The Shiller CAPE ratio in particular has a high correlation with 10-year forward returns. When valuations are elevated, future earnings upside is already priced in, usually resulting in poor subsequent performance for share prices. GuruFocusWhile high valuations can be concerning, they don't necessarily mean stocks are destined to underperform. "Earnings volatility has decreased: companies with high S&P quality ranks make up more than 60% of the index, up from <50% in the 2000s."