The Stock Market Is on the Verge of Doing Something That No One's Witnessed Dating Back to Nearly the U.S. Civil War -- and It Has Alarming Implications

The article argues that the U.S. stock market, particularly the S&P 500, is nearing an extreme valuation event: the Shiller CAPE ratio is approaching its dot-com era all-time high. It notes the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite have recently hit record highs, driven by AI enthusiasm, strong earnings, buybacks, IPO excitement, and stock splits. However, the piece warns that CAPE readings above 30 have historically been followed by major market declines, citing prior episodes such as 1929 and the dot-com bubble. Despite the bearish short-term signal, the article also emphasizes that long-term holding periods have historically rewarded investors, with every rolling 20-year period from 1900 to 2025 producing positive returns for the S&P 500. The overall message is that valuation risk is elevated even as the long-term market backdrop remains constructive.