If a Stock Market Crash Is Coming, History Says This Investing Strategy Has Never Once Failed
Katie Brockman, The Motley Fool
Mon, August 10, 2026 at 4:20 AM GMT+5:30
4 min read
- ^GSPC
+0.62% - ^DJI
+0.28% - NVDA
+2.27%
Major market indexes are surging yet again, with both the S&P 500 (SNPINDEX: ^GSPC) and the Dow Jones Industrial Average (DJINDICES: ^DJI) hitting new record highs earlier this week
However, continued volatility within the tech industry has left investors with mixed feelings about the market. While 37% of investors feel optimistic about the next six months, according to the latest weekly survey from the American Association of Individual Investors, 38% feel pessimistic and 25% are neutral
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
While history suggests the market may be in risky territory, it can also offer investors a clear road map for how to prepare
Will the stock market crash in 2026?
First, it’s important to note that nobody can predict the market’s short-term moves, and no stock market indicator is 100% accurate. That said, sometimes these metrics can provide context for the market’s recent performance and guide investors’ strategies
The Buffett indicator and the S&P 500 Shiller CAPE (cyclically adjusted price-to-earnings) ratio are popular market metrics that both offered warning signals ahead of major market downturns — specifically, the dot-com bubble burst of the early 2000s
The Buffett indicator was popularized by Warren Buffett in the early 2000s, who famously noted that investors are “playing with fire” when the metric nears 200%. As of this writing, the Buffett indicator is at its highest level on record, at just over 232%
The S&P 500 Shiller CAPE ratio measures the S&P 500’s long-term inflation-adjusted earnings, and it currently sits at just over 41 — the second-highest point in history, behind its peak of 44 just before the dot-com bubble burst
Again, this doesn’t necessarily mean that a market crash is imminent. It does, however, suggest that the broader market may be overvalued. Over time, valuations tend to correct themselves, meaning stock prices will likely face a pullback eventually
History says this is the best move investors can make
Regardless of when the next bear market begins, right now is the ideal time to start preparing your portfolio. And if history proves one thing, it’s that keeping a long-term outlook is key to surviving volatility
Since 1919, every single one of the S&P 500’s 20-year periods has ended in positive total returns, according to analysis from Crestmont Research. This means that if you’d invested in an S&P 500 ETF or index fund at any point in history and held it for 20 years, you’d have made money
