Is A Stock Market Crash Coming Soon? History Has Good and Bad News for Investors.

Big Idea

• Key stock market indicators suggest a downturn may be on the way.

• However, there is a lot of good news ahead for investors.

• Investing in the right places is critical to surviving a downturn or bear market.

• 10 stocks we like better than the S&P 500 Index ›

Many investors are not sure how to feel about the market right now. According to a February 2026 survey from the American Association of Individual Investors, 35% feel optimistic about the next six months, 37% feel pessimistic, and the remaining 28% feel neutral.

So if you have mixed feelings about investing, you’re not alone. But what does the data say about the future of the market? History has both the good and the bad about where we are headed.

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Stock market indicators are raising the alarm

First, the bad news: Multiple stock market metrics with a history of predicting declines are raising red flags for investors.

The S&P 500 Shiller CAPE ratio, for example, is at a record high. This metric measures the average inflation-adjusted earnings of S&P 500 (SNPINDEX: ^GSPC) over the past 10 years, and is used to assess long-term value.

Historically, the top metrics show that prices are likely to fall in the coming years. Its long-term average is around 17, and peaked in 1999 at 44, shortly before the dot-com bubble burst. As of this writing, the metric has reached 40 – the second-highest ever.

S&P 500 Shiller CAPE Ratio data by YCharts

The Buffett indicator is another metric that has not-so-good news for investors. Popularized by Warren Buffett, it measures the ratio between the total number of US stocks and US GDP. It is often used to determine market value, and the higher the number, the more overpriced the stock may be.

Warren Buffett used this metric to accurately predict the start of the dot-com bubble, and in a 2001 interview with Fortuneexplained how to interpret the data:

“For me, the message of that chart is this: If the average ratio falls to the 70% or 80% area, buying stocks can work well for you. If the ratio reaches 200% – as it was in 1999 and part of 2000 – you are playing with fire.”

As of this writing, the Buffett indicator sits at around 219%.

Good news for investors

No stock market indicator is 100% accurate, and even if a pullback is coming, there’s no way to know exactly when it will start. There is always a chance that the market may have several more months of growth before the next bear market begins, and if you stop investing now, you could lose out on a big profit.

Although all this uncertainty can be discouraging, the good news about the market is that its long-term potential outweighs any short-term volatility.

^SPX data by YCharts

History has shown time and time again that the market can survive even severe economic shocks, and often recover faster than most people think. The average S&P 500 bear market since 1929 has lasted just 28 days, or about nine months. The average bull market, on the other hand, lasted nearly three years.

The most effective way to build wealth in the stock market is to invest in a variety of stocks and hold them for at least several years. Short-term volatility can be hard to stomach, but a solid portfolio filled with healthy stocks can set you up for lucrative long-term earnings — no matter what happens with the market.

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Katie Brockman has no position in any of the listed stocks. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.