Since 1871, the Stock Market Has Accomplished This Feat 6 Times, Including the Present -- and the Previous 5 Occurrences All Ended in Disaster

With a little over three months left in 2026, it's shaping up as another stellar year for Wall Street and investors. Through the closing bell on Sept. 15, the time-tested Dow Jones Industrial Average (DJINDICES:^DJI), benchmark S&P 500 (SNPINDEX:^GSPC), and growth stock-dominated Nasdaq Composite (NASDAQINDEX:^IXIC) had gained 8.4%, 10.8%, and 11.8%.

Wall Street's bull market, which'll reach its fourth full year next month, has been fueled by the evolution of artificial intelligence, better-than-expected corporate earnings, and favorable tax policy that led to record S&P 500 share buybacks last year.

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But as much as investors enjoy seeing green arrows in their portfolio, history shows bull markets aren't indefinite . Several headwinds are threatening to upend the stock market, including near-record-high outstanding margin debt, persistently elevated inflation, and rapidly rising U.S. debt.

However, one history-backed metric with a knack for foreshadowing significant downside in the Dow, S&P 500, and Nasdaq Composite, suggests the party is about over for Wall Street.

The stock market has done this six times, spanning nearly 156 years

Although past events can't guarantee what's to come for the stock market, history has a way of rhyming more often than not. This makes historical precedent an important teacher for those willing to listen.

Arguably, no history-driven event is telling a story quite as loud as stock valuations at the moment.

Valuing stocks or the broader market is a tricky subject, given that there isn't a perfect blueprint for evaluating public companies. This allows investors' subjectivity and emotions to come into play, which is what makes accurately predicting short-term directional moves in individual stocks and the broader market so difficult.

But there's one valuation tool that, when back-tested to January 1871, has consistently and accurately foreshadowed disaster for the stock market: the S&P 500's Shiller Price-to-Earnings (P/E) Ratio, also known as the Cyclically Adjusted P/E Ratio ( CAPE Ratio ).

What helps the Shiller P/E stand out is that it's based on average inflation-adjusted earnings over the last 10 years. Accounting for a decade's worth of earnings history, as opposed to just the trailing year, as the traditional P/E ratio does, ensures that the Shiller P/E always remains useful -- even during recessions.