The S&P 500’s CAPE ratio has stayed above 40 for 3 months. That has happened only 6 times since 1871.
History has not been kind
The previous five episodes came before major market trouble:
- 1929: Great Depression
- 1999: Dot-com crash
- 2018: 20% market drop
- 2020: 34% S&P 500 plunge
- 2022: Nasdaq fell by a third
Is AI the next dot-com?
Today’s giants are profitable, but AI labs are burning cash at an unprecedented scale. The big question is whether AI growth can turn into lasting profits.
The market is more concentrated
The Mag 7 make up 32.5% of the S&P 500, while the top 10 stocks account for nearly 40%.
And investors are borrowing more
Margin debt hit a record $1.53 trillion, up over 50% in a year.
Expensive. Concentrated. Leveraged.
The warning is real, but these indicators cannot predict when a crash will happen.
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