The internet bubble of 2000 was the worst point of overvaluation for the S&P 500 in its history. Having averaged 16 times cyclically adjusted earnings since 1881, the market soared to 44 times, well over twice normal levels. The losses and forgone returns since then have caused many investors to question whether the long-term history of equity returns is relevant any more. While this is an understandable reaction, it is the wrong one. The last 12 years have been part of an essential healing process for U.S. equities, and have brought valuations down from 44 times normal earnings to 21 times. As we analyze equity returns, this means the healing process is not yet done, and the U.S. equity market is likely to continue disappointing investors for a few years longer.