Analysis of DCA Strategy Adjustments Under Nasdaq's 39x Shiller P/E Ratio

The current Nasdaq Shiller Price-to-Earnings Ratio (CAPE) reaches 39x, the second-highest level in history, only lower than the 44x peak during the 2000 dot-com bubble [1][2][3]. Historical data shows that when the Shiller P/E Ratio of the Nasdaq or S&P 500 exceeds 30 and remains for a period of time, there have been multiple declines of 20% to 89%, such as the Nasdaq’s 78% drop after the 2000 dot-com bubble burst and the 56% drop during the 2008 financial crisis [1][3]. Although the time interval between high valuations and corrections is uncertain, and the profit potential of high-growth industries such as current AI may not be fully reflected, this valuation level is already above the 98th percentile in history, with significant long-term risks [1][2].

From the perspective of market performance, from December 17, 2024, to December 17, 2025, the Nasdaq (^IXIC) rose by 12.93% with a volatility of 1.55%, and the 200-day moving average shows that the long-term trend is still upward [0]. However, it should be noted that the macroeconomic environment (debt levels, geopolitical risks, etc.) may exacerbate the potential correction magnitude [2].

1. The ‘safety cushion’ of DCA is weakened in extreme valuation environments
   : Historically, investors who started DCA in high valuation ranges may have to experience long-term floating losses, such as investors who did DCA on the Nasdaq during the 2000 dot-com bubble not breaking even until around 2015 [1][3].

2. Differentiated strategies reflect the balance between risk and belief
   : The article recommends that investors with heavy positions reduce their holdings, while new DCA investors continue to persist. This reflects that in high valuation environments, dynamic adjustments based on position status are needed—both to control short-term risks and to adhere to the concept of long-term DCA.

3. Attention should be paid to the limitations of the Shiller P/E Ratio
   : This indicator is based on the average profit of the past 10 years and may not fully reflect the future profit potential of current high-growth industries such as AI. Therefore, it is necessary to combine other indicators to comprehensively judge market valuations [3].

• Long-term correction risk: Historically, the average decline after similar valuation levels is about 50% [2], and the current macro environment may amplify the decline.
• Extended DCA cycle: The break-even period of DCA under high valuations may be significantly prolonged.
• Unclear strategy: The article does not clearly define ‘heavy positions’ or specific allocation suggestions for new DCA investors, which may lead to confusion in investors’ decision-making.

• Long-term growth potential: Although short-term risks are high, the long-term growth logic of Nasdaq components (especially the technology industry) still exists, and DCA can still share long-term returns.
• Strategy adjustment space: Differentiated strategies provide investors with a path to balance risks and returns.

The current Nasdaq is in a high valuation range, with significant long-term correction risks, but the long-term value of the DCA strategy is still recognized. Investors should adjust their strategies according to their own position status: Investors with heavy positions can appropriately reduce their holdings to control short-term risks, while new DCA investors can continue to persist, but need to extend the investment cycle and pay attention to the limitations of the Shiller P/E Ratio. At the same time, investors need to comprehensively judge market trends by combining the macroeconomic environment and industry profit potential, and avoid decision-making based on a single indicator.