🟢 [E8983] Shiller demonstrates that the 1982-2000 Millennium Boom was the largest in U.S. history, with the market rising 7.7-fold (July 1982 to August 2000). The CAPE ratio reached 47.2 on March 24, 2000—the highest ever recorded, exceeding even September 1929's peak of 32.6. As of 2014 writing, CAPE at 26 exceeded all historical periods except the 1929, 2000, and 2007 peaks, warning of extreme overvaluation risk.

🟢 [E8984] Historical analysis of post-peak returns following extreme CAPE valuations shows consistently devastating outcomes. After the 1929 peak (CAPE 32.6), real returns including dividends were -13.1% annually for 5 years and -1.4% annually for 10 years. After the 1901 peak (CAPE 25.2) and 1966 peak (CAPE 24.1), returns were significantly below normal for 15-20 years, establishing a pattern that CAPE above 25 precedes only the worst market outcomes.

🟢 [E8985] Shiller defines speculative bubbles as psychological contagion where news of price increases spurs enthusiasm spreading person-to-person, amplifying justifying narratives and drawing in ever-larger classes of investors. The 1994-2000 stock market increase 'could not obviously be justified in any reasonable terms' as basic economic indicators did not come close to tripling despite stock prices roughly tripling, illustrating the disconnect between fundamentals and prices.

🟢 [E8988] Shiller's CAPE analysis provides a long-term valuation framework for portfolio allocation: with a 2014 CAPE of 26 exceeding all historical readings except three prior bubble peaks (1929, 2000, 2007), the data strongly implies future long-term real equity returns will be below historical averages. Historical precedent shows that entering equities at elevated CAPE levels consistently produced negative or sub-par real returns over 10-20 year horizons.

💬 [E8987] Alan Greenspan's 'irrational exuberance' speech on December 5, 1996 triggered immediate global market selloffs: Nikkei fell 3.2%, Hang Seng 2.9%, DAX 4%, FTSE 4%, and the Dow dropped 2.3% the next morning. This demonstrates how sensitive speculative markets are to authoritative bubble labeling, even when the underlying bubble continued for nearly four more years before the actual March 2000 peak.

🟢 [E8986] Shiller identifies a structural mean-reversion pattern in equity valuations using the CAPE ratio across four major peaks: 1901 (CAPE 25.2), 1929 (CAPE 32.6), 1966 (CAPE 24.1), and 2000 (CAPE 47.2). Each peak was followed by extended periods of poor real returns lasting 10-20 years. This framework suggests that extreme valuations are the single most reliable predictor of long-term return disappointment, forming a durable regime-change indicator.