Overview
- The S&P 500’s forward P/E is about 22, the Shiller CAPE sits near 39–40, and the Buffett Indicator is roughly 230%, placing multiple valuation measures at or near rare historical peaks.
- The Buffett Indicator now stands about two standard deviations above its trend line, and past stretches to this level were followed by sizable market drawdowns, though timing is uncertain.
- Consensus targets point to roughly a 10% rise for the S&P 500 this year after a 16% gain in 2025 and a decade-long advance of 256% excluding dividends.
- Market concentration remains elevated, with the Magnificent Seven near one‑third of S&P 500 value, yet most of the group lagged the index in 2025 and its index has started 2026 up 0.5% versus 1.8% for the S&P 500.
- Earnings leadership shows early signs of broadening as Big Tech profit growth is projected to slow to about 18% in 2026, closer to the roughly 13% expected for the rest of the index, while group valuations have cooled to about 29 times forward earnings.