There is rarely a clear-cut start and end date to a recession. By the time people realize they are in a recession, it's usually been going on for several months. That's because much of the economic data that investors and consumers rely on is released with a lag. There are often revisions to this data, which can indicate that the economy might have been performing much better or worse than everyone initially believed. While the U.S. does not currently appear to be in a recession, recent data suggests tha ...

Market Overview - The markets have become increasingly nervous in 2026, transitioning from a rotation out of tech stocks to a broader sell-off of sectors potentially disrupted by artificial intelligence (AI) [1] Investment Strategies - The S&P 500 and Nasdaq-100 have not yet seen significant pullbacks, but there is a risk of larger declines if investor fear escalates [2] - In a potential bear market, investors may want to consider sectors that could perform well during stock corrections [2] Recommended ETFs - **Vanguard Extended Duration Treasury ETF (EDV)**: This ETF serves as an alternative to stocks in a bear market, though it carries interest rate sensitivity and volatility. If interest rates decline, the share price could see significant upside potential [5][6] - **Vanguard Consumer Staples ETF (VDC)**: This ETF invests in defensive stocks that typically experience less decline than the S&P 500 during market corrections. For instance, in 2022, while the S&P 500 fell over 18%, this ETF only dropped less than 2%, providing substantial downside protection [7] - **Vanguard Total Bond Market ETF (BND)**: This ETF offers a standard hedge against equity portfolio risk, encompassing a broad range of investment-grade bonds. It has lower interest rate sensitivity compared to the Extended Duration Treasury ETF and is likely to provide protection and risk mitigation during bear markets [8][9][10]

Core Viewpoint - The S&P 500's high valuation poses a risk of significant stock price declines, particularly if tariffs negatively impact economic growth [1][2] Group 1: Tariffs and Economic Impact - President Trump's tariffs have increased the average tax on U.S. imports to approximately 13%, the highest level in 90 years [4] - Studies indicate that U.S. companies and consumers are primarily bearing the costs of tariffs, with estimates suggesting they paid 94% to 96% of the tariff burden [6] - The Congressional Budget Office (CBO) predicts that tariffs will lead to lower real GDP, negatively affecting corporate earnings and stock valuations [8] Group 2: Stock Market Valuation - The S&P 500's forward price-to-earnings (PE) ratio was reported at 22.2, significantly above the 10-year average of 18.8, indicating an elevated valuation [9] - Historical comparisons show that similar high valuations occurred during the dot-com bubble and the Covid-19 pandemic, both of which resulted in substantial market declines [9] - If forward earnings estimates are overestimated due to tariffs, a sharp decline or crash in the stock market could occur [10]

Core Insights - Legendary investor Peter Lynch emphasizes that stock market crashes should be viewed as opportunities rather than reasons to panic, highlighting the inevitability of market declines over time [1][7] Market History and Volatility - Lynch notes that over the past 93 years, markets have experienced approximately 50 declines of 10% or more, indicating a correction roughly every two years [2] - He states, "If you are not ready for this, you shouldn't own stocks," reinforcing the importance of being prepared for market fluctuations [2] Investment Opportunities - Market crashes can provide better entry points for strong businesses with solid fundamentals, as illustrated by Lynch's example of a stock dropping from 14 to 6 [3] - He highlights the potential for exceptional returns, citing a move from 6 to 22 as an example of how long-term investors can benefit from buying quality companies at lower prices during downturns [4] Market Timing and Patience - Lynch argues against the futility of market timing, stating that consistently predicting crashes is nearly impossible [5] - Instead, he advises investors to focus on understanding the businesses they own and emphasizes the importance of patience, using Walmart as an example where late investors could still achieve significant returns [6] Long-term Perspective - Lynch's message serves as a reminder that stock market crashes are part of how markets operate, not signals to panic [7] - For investors who understand their businesses, remain patient, and embrace volatility, downturns can be among the most rewarding moments in their investing journey [7]

On any given day, you probably shouldn't bet on a stock market crash happening, and generally, it isn't worth losing sleep over whether a crash is about to happen. Nonetheless, it's worth planning ahead so that you'll know precisely what to do when one actually does happen someday. So, on that note, between Bitcoin (CRYPTO: BTC) or XRP (CRYPTO: XRP), which one is more likely to still have a reason to exist after the dust from a crash settles? Where to invest $1,000 right now? Our analyst team just reveale ...

Economic Overview - The S&P 500 has advanced 1% year to date and is close to its record high, but potential economic fallout from tariffs and high valuations could lead to a significant market decline in 2026 [1] - President Trump's assertion that tariffs are strengthening the economy is contradicted by data, indicating that the average tax on U.S. imports has increased fivefold [2] Tariff Impact - A study linked by President Trump claims that foreign producers bear the majority of tariff costs, but this is misrepresented; the study indicates that U.S. consumers pay up to 43% of the tariff burden, with U.S. firms absorbing the rest [3][2] - The claim that tariffs have led to extraordinary economic growth is challenged by the fact that GDP growth was below average in the first three quarters of 2025, with AI spending being a significant contributor to economic support [4] Market Valuation - The S&P 500 is trading at a forward P/E ratio of 22.2, which is considered expensive; historically, such valuations have preceded bear markets during the dot-com bubble and the Covid-19 pandemic [5] - Real GDP growth for the first nine months of 2025 was 2.51%, below the 10-year, 30-year, and 50-year averages, indicating potential economic weakness [6] - AI spending contributed 0.97 percentage points to real GDP growth, suggesting that without it, GDP growth would have been only 1.54% [6]

Core Insights - The S&P 500 has shown double-digit gains for the past three years and has increased by 1.4% year-to-date, with expectations for continued strong performance into 2026 [1] - Current valuations indicate that the S&P 500 is trading at a high premium, with a forward price-to-earnings (P/E) ratio of approximately 22, significantly above its 30-year average of around 17 [1] - The market's CAPE ratio, which averages about 28.5 over 30 years, is currently near 40, marking only the second occurrence in 153 years that it has reached this level [2] Valuation Metrics - The forward P/E ratio of the S&P 500 is about 22, which is historically high and reminiscent of periods before significant market downturns, such as the tech sell-off in 2021 [1] - The CAPE ratio is currently at approximately 39.85, indicating a valuation level that has historically preceded market crashes, notably in 2000 [2] Market Outlook - While high valuation metrics do not guarantee a market crash in 2026, they suggest that the S&P 500 has risen beyond sustainable levels [3] - The market has demonstrated resilience, but the current signals indicate that investors should be cautious and consider selecting investments that can endure potential market volatility [4] Investment Recommendations - The Motley Fool Stock Advisor has identified ten stocks that are recommended for investment, which do not include the S&P 500 Index, suggesting alternative opportunities for potentially higher returns [5]

A couple of historical data points are painting a worrisome picture for Wall Street.For the better part of President Donald Trump's first term in the White House, the stock market was unstoppable. By the time he left office in January 2021, the ageless Dow Jones Industrial Average (^DJI 0.36%), benchmark S&P 500 (^GSPC 0.43%), and growth-focused Nasdaq Composite (^IXIC 0.94%) had soared by 57%, 70%, and 142%, respectively. It marked one of the highest annualized returns overseen by any president, dating bac ...

Core Insights - The article discusses the potential for a stock market crash and suggests that certain Vanguard funds can help mitigate losses during such an event [2] - It highlights the importance of diversifying investments to protect portfolios against market downturns [2] Group 1: Vanguard Short-Term Treasury ETF - The Vanguard Short-Term Treasury ETF (VGSH) is recommended as a safer investment option, especially in light of declining long-term Treasury reliability [3] - This ETF currently holds 92 U.S. Treasury bonds with an average duration of 1.9 years and has a low annual expense ratio of 0.03% [5] - The fund offers a 30-day SEC yield of approximately 3.6%, making it a relatively safe choice for investors [5] Group 2: Vanguard Total Bond Market ETF - The Vanguard Total Bond Market ETF (BND) is noted for its potential to provide downside protection, owning 11,444 bonds with an average duration of 5.7 years [6][7] - Approximately 69% of its holdings are U.S. government bonds, while the remainder consists of corporate bonds rated BBB or higher [7] - The ETF has a 30-day SEC yield of nearly 4.2%, appealing to investors seeking higher income potential [8][9] Group 3: Vanguard U.S. Minimum Volatility ETF - The Vanguard U.S. Minimum Volatility ETF (VFMV) focuses on stocks that are expected to be less volatile, making it a suitable option for risk-averse investors [10][11] - The fund includes 186 stocks across 10 sectors, with top holdings in companies like Lam Research and Johnson & Johnson [11] - It has a beta of 0.56, indicating that it is likely to experience less volatility than the broader market during downturns, despite a slightly higher expense ratio of 0.13% [12][13]

Group 1 - A significant portion of the American population, approximately 80%, expresses concern about a potential recession, indicating widespread anxiety regarding market volatility [1] - The Buffett indicator, which measures the total value of U.S. stocks relative to U.S. GDP, is currently at a record high of 223%, suggesting that investors may be at risk if this trend continues [2] - Historical trends indicate that strong companies are more likely to endure market downturns, emphasizing the importance of investing in firms with solid fundamentals [7] Group 2 - The dot-com bubble serves as a historical example where many companies with weak business models failed during a market crash, while a few, like Amazon, managed to recover significantly over the long term [5][6] - Identifying strong investments involves analyzing a company's financial health through metrics such as the price-to-earnings (P/E) ratio and debt-to-EBITDA ratio, which can indicate overvaluation or excessive debt [10] - With increasing recession fears, it is crucial for investors to prepare their portfolios for potential volatility, as the right stocks can not only survive a bear market but also achieve long-term growth [9]