These Stock Market Indicators Are Sounding the Alarm. Here's What Investors Should Do Right Now.

Stock prices whitethorn beryllium surging, but galore investors are having mixed feelings astir the market.

While astir 40% of investors inactive consciousness optimistic astir the adjacent six months, according to the astir caller play survey from the American Association of Individual Investors, astir 30% interest that banal prices volition autumn successful the coming months.

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Nobody tin foretell the future, particularly the abbreviated term. But determination are a mates of informing signs investors whitethorn privation to wage attraction to close present -- on with immoderate steps to hole for a imaginable downturn.

There's nary mode to foretell what the marketplace volition bash this year, but it tin sometimes beryllium adjuvant to usage humanities discourse to get a consciousness of what's happened successful akin circumstances. And determination are 2 banal marketplace metrics that person not-so-good quality for investors.

First, the S&P 500 Shiller CAPE (cyclically adjusted price-to-earnings) ratio. This metric is based connected the mean inflation-adjusted net implicit the past 10 years, and it's commonly utilized to find whether the S&P 500 is over- oregon undervalued. The higher the figure, the much overvalued the scale whitethorn be.

Historically, the mean Shiller CAPE ratio sits astatine astir 17. As of February 2026, though, this metric is nearing 40. This is the second-highest worth successful history, adjacent to the highest anterior to the dot-com bubble successful the aboriginal 2000s.

The 2nd metric to ticker is the Buffett indicator, which measures the ratio of U.S. gross home merchandise (GDP) to the full marketplace worth of U.S. stocks. It was popularized by Warren Buffett, who explained successful a 2001 interrogation with Fortune magazine however helium utilized the metric to correctly foretell the dot-com bubble burst.

"For me, the connection of that illustration is this: If the percent narration falls to the 70% oregon 80% area, buying stocks is apt to enactment precise good for you," helium said. "If the ratio approaches 200% -- arsenic it did successful 1999 and a portion of 2000 -- you are playing with fire."

As of this writing, the Buffett indicator sits astatine 221%. The past clip the metric neared 200% was successful November 2021, conscionable earlier stocks entered a carnivore marketplace that would past astir a year.

No banal marketplace metric is perfect, arsenic past show doesn't foretell aboriginal returns. Even if determination are beardown humanities patterns suggesting a downturn could beryllium looming, that doesn't needfully mean a crash, recession, oregon carnivore marketplace is imminent.