The Stock Market Is Doing Something Observed Only Once Before. History Is Clear About What Comes Next.

Despite recent market rallies, a key valuation metric, the S&P 500 Shiller Cyclically Adjusted Price-to-Earnings (CAPE) ratio, has remained above 40 since May, a level only seen once before in history during the dot-com bubble. This suggests that stocks are unusually richly valued, potentially signaling an impending market downturn. While not a definitive predictor, historical patterns indicate that stock prices tend to fall in the years following such peaks.