The Stock Market Just Did Something It Hasn’t Done Since 1999. History Has a Clear Answer.

The S&P 500 index (^GSPC +0.80%) continues to prove the bears wrong. The benchmark’s level has risen 8% in April (as of April 22). And it has produced a total return of 300% in the past decade.

After such a phenomenal performance that’s significantly better than its average historical return of 10%, investors might consider being cautious. The stock market just did something it hasn’t done since the dot-com bubble period of 1999.

History provides a clear answer as to what might happen next.

Image source: Getty Images.

According to the CAPE ratio of 40.1, the S&P 500 is extremely expensive these days. The last time this popular valuation metric was this high was in 1999, before this century even started.

Research conducted by Invesco, which analyzes the relationship between starting CAPE ratios and forward returns, reveals a possibly bleak future. When the CAPE ratio is this high, the S&P 500’s annualized gains over the following 10 years can be negative.

Before you rush to sell your entire portfolio, it’s worth thinking about the bullish case. The market’s powerful tailwinds, like major contribution from dominant technology enterprises, huge capital inflows from passive investors, and ongoing currency debasement, will keep propelling it for the foreseeable future.

While it’s always a smart move to keep valuation in mind, it’s also important to be optimistic about the long term.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Source link

Visited 1 times, 1 visit(s) today

Related Article

Adecoagro Sets 2026 Dividend Plan As Cash Returns Face Key Tradeoffs

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Adecoagro (NYSE:AGRO) has approved a new cash dividend distribution to shareholders. The dividend will be paid in two installments scheduled for May and November 2026. The decision reflects a planned return of capital to investors

The Mistakes I Keep Seeing ETF Investors Make With “Set It and Forget It” Funds

For as much good as the ETF industry has done in offering hundreds of ultra-cheap investment products targeting almost every market, sector, and theme, they’re not perfect. We often hear the phrase “set it and forget it” when it comes to investing. I’ve used it several times myself. While that theory works at a high

Amkor (AMKR) Reports Earnings Tomorrow: What To Expect

Semiconductor packaging and testing company Amkor Technology (NASDAQ:AMKR) will be announcing earnings results this Monday after market hours. Here’s what to look for. Amkor beat analysts’ revenue expectations last quarter, reporting revenues of $1.89 billion, up 15.9% year on year. It was an exceptional quarter for the company, with a beat of analysts’ EPS estimates

Stock Market Outlook: 4 Signs AI Trade Could Soar 30% in Dot-Com-Style Rally

The stock market looks like it’s headed for a 1999 moment, BCA Research says. Loading audio narration… The investment research firm said it sees the potential for an AI-fueled “melt-up” in the stock market— a sharp rally in stocks that other forecasters have predicted could be followed by a brutal meltdown. BCA said that’s because

2 ETFs to Buy With $100 and Hold Forever

The stock market has already taken investors for a ride in 2026. After a relatively calm first two months of the year, the S&P 500 fell 9% only to turn around and bounce 12% higher off the lows. The uncertain direction of the Iran war, inflation, and economic growth has most people focused on what

This Ultimate AI Stock Has Gained 26% This Year and Still Isn’t Done

Nvidia (NVDA +4.30%) became the world’s most valuable company because it is a critical part of the AI build-out. Companies need Nvidia chips for computational power, but it turns out Nvidia needs another company to manufacture its chips. Taiwan Semiconductor Manufacturing Co. (TSM +5.08%) creates the chips that Nvidia designs. It’s not just Nvidia, either.

Software’s comeback bid is fading as chip stocks smash records: Chart of the Day

Software had a chance to take the baton — but chips grabbed it back. The iShares Expanded Tech-Software Sector ETF (IGV) is no longer breaking down. After sliding over 5% on Thursday — its worst day since the April 4 post-”Liberation Day” sell-off — it fought back to finish slightly positive on the week. Software

3 Market Trends That Could Shape the Rest of 2026

The past few years have featured pretty much just one dominant market theme: artificial intelligence (AI). Stock market winners, economic growth figures, and earnings expectations were all built around the AI development story. 2026 looks a little different. The AI narrative is still hanging around, but it’s more in the background now. The Iran war,

Why Beyond Meat Stock Surged This Week

Beyond Meat (BYND 8.07%) stock closed out this week’s trading with a gain of 6.1%. At one point across the stretch, the company’s share price had been up 25.6% from where it stood at the end of the previous week’s market close. Beyond Meat’s valuation moved higher in conjunction with bullish momentum for the broader

1 Small‑Cap Sports‑Data Stock That Could 5X as Prediction Markets Explode

Sometimes, companies and investors ought to be careful about what they wish for. Genius Sports (GENI +2.76%) and Sportradar (SRAD +3.02%) are arguably good examples of that sentiment. At their cores, Genius and Sportradar are sportsbook data providers. Still, over the years, some analysts have argued the shares should be treated more like SaaS stocks

Wall Street Says the Stock Market’s Return in 2026 Will Beat the 30-Year Average

Nearly 5,500 companies were listed across U.S. stock exchanges as of the first quarter of 2026, according to the Security Industry and Financial Markets Association (SIFMA). Of those companies, the 500 largest ones that are domiciled in the U.S. are included in the S&P 500 (^GSPC +0.80%), an index that is generally synonymous with the

2 Breakout Growth Stocks You Can Buy and Hold for the Next Decade

One of the best ways to find great growth stocks is to identify companies with accelerating revenue growth and the potential to deliver durable long-term growth. These are the type of breakout growth stocks that can turn into multibaggers in your portfolio. Right now, it is difficult to find these types of businesses trading at

The Federal Reserve’s Interest Rate Dilemma Is About to Go From Bad to Warsh — and the Stock Market May End Up Paying the Price

One of the greatest aspects of putting money to work on Wall Street is the disproportionate nature of investing cycles. While bear markets are normal, healthy, and inevitable, bull markets last substantially longer. It’s why the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) ascend to new highs

0
Would love your thoughts, please comment.x
()
x