The S&P 500 keeps hitting new highs. Investment-grade bond spreads are just 0.8% above Treasuries, showing little extra reward for risk. Investors are paying more than three times sales for the median company, the highest ever. Retail investors poured a record $155 billion into U.S. stocks in the first half of the year, while more than 850 unprofitable companies in the Russell 3000 gained an average of 36% since April. At the same time, nine Big Tech companies now make up 36% of the S&P 500’s value, the highest concentration in fifty years. Across valuation models, the same picture emerges: markets are stretched to extremes: - The [[Buffet Indicator]] (market cap-to-GDP) is at 214%, its highest ever, far above the dot-com peak of ~150% and well beyond the historical average of ~100%. - The **[NASDAQ 100’s P/E ratio]([https://worldperatio.com/index/nasdaq-100/](https://worldperatio.com/index/nasdaq-100/))** sits at 33, double the long-term norm of 15–16 and approaching dot-com levels. - The **[P/S ratio](https://www.macrotrends.net/stocks/charts/NDAQ/nasdaq/price-sales)** is 6.7 versus a typical ~1.0, meaning investors are paying record premiums even before companies show profitability. - The **S&P 500** is now **187% above its historical trendline**, a deviation never seen before, and comparable stretches in 1929, 2000, and 2007 all ended with violent corrections. [Mean Reversion](https://www.advisorperspectives.com/dshort/updates/2025/09/02/regression-to-trend-s-p-composite-187-above-trend-in-august.com) The only signal not yet flashing red is the **[[Sahm Rule]]**, which triggers when unemployment rises by 0.5 percentage points from its low. For now, it stands at 0.13. But history shows that when this line is crossed, recession is already underway — and the rule has never given a false positive. > the market is running hotter than at any point in history, fueled by record inflows, sky-high valuations, and a fragile reliance on a handful of Big Tech firms. With every major metric flashing overvaluation at once, history suggests the eventual correction is not optional but inevitable. [[Themes shaping 2025]] [[General Market Direction]] [[Making sense of a shifting world]] [[Navigating the Crisis Cycle - Tariffs, Uncertainty, and the Price of Risk]]