The S&P 500's CAPE ratio has reached 41.1, its sixth occurrence above 30 since 1871, signaling potential market vulnerability.
Historical precedents from 1929, the dot-com bubble, and recent years suggest such high valuations often precede significant corrections or bear markets.
The current optimism driven by AI is threatened by rising interest rates under new Fed Chair Kevin Warsh, which could exacerbate valuation risks.
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