The Stock Market Is Doing Something Observed Just 3 Times Since 1871 -- and History Is Crystal Clear What Happens Next

Group 1 - The stock market's three main indexes, the S&P 500, Nasdaq Composite, and Dow Jones, have shown significant year-to-date gains of 14.7%, 19%, and 10.8% respectively through October 21 [1] - The Shiller price-to-earnings (P/E) ratio, a key metric for assessing the S&P 500's valuation, is currently around 40, indicating a historically high level of market expense [5][9] - The S&P 500 is trading at a 124% premium to its historical average, marking it as the third most expensive in history [7][9] Group 2 - Historical precedents indicate that the last two instances when the Shiller P/E ratio exceeded 40 were followed by significant market downturns, including a nearly 50% drop after the dot-com bubble and a 19% decline in 2022 [6][7] - The first instance of the Shiller P/E ratio surpassing 40 occurred in late 1999, leading to a severe market crash, particularly affecting the Nasdaq Composite, which fell by around 78% [6] - The second instance was in January 2022, during a bull run fueled by COVID-19, which resulted in the S&P 500's worst performance since 2008 [7]