The Market Is Doing Something It's Only Done Once Before. Here's What History Says Happens Next.
You might be disappointed to find out, but there's a silver lining.
The market has experienced a remarkable 14% year-to-date increase, with the S&P 500 poised to end 2026 at an even higher level, marking the fourth consecutive year of double-digit gains. This pattern, which hasn't been witnessed since the late 1990s, has significant implications for investors. During that period, the cyclically adjusted price-to-earnings ratio (CAPE) surpassed 40 for the first time, a metric that has since become a more reliable valuation indicator than the average P/E ratio.
Today, the CAPE ratio stands at nearly 41, following its surpassing of the 40 threshold in May. This historical context suggests that the current market trajectory could lead to another five years of strong growth.
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