The stock market has been in a historic crisis since 2023. Anyone who survived the deadly bear market of 2022 and then stayed put has been handsomely rewarded. THE S&P500 (SNPINDEX: ^GSPC) generated total returns of approximately 24% in 2023, 23% in 2024 and 16% in 2025, and it further increased by approximately 12% in 2026 as of September 25. Nasdaq Composite (NASDAQINDEX: ^IXIC) has been even hotter, with gains close to 43%, 29% and 20% over those full three years, as well as a 16% rise so far this year.
This kind of gathering doesn’t happen often. The question savvy investors should ask themselves is: If a bear market is coming, what can you actually do to stay ahead of the curve? Fortunately, Warren Buffett has offered some sage advice to help you navigate these exact scenarios.
Did you miss Nvidia in 2009? This rare signal flashes again. In 2009, a “Double Down” signal sounded for a little-known chipmaker called Nvidia. For the first time in years, this same signal of “total conviction” is ringing out for a company 1/100th the size of Nvidia. Continue “
A multi-year rally built on artificial intelligence (AI)
The catalyst for the market’s generational dynamics is no mystery. At the end of 2022, OpenAI commercially launched ChatGPT. Investors quickly decided that artificial intelligence (AI) would reshape every major industry, as unprecedented spending on chips, data centers and software became the norm. The economy was doing well while corporate profits held up. This combination turned a nice rebound into a multi-year stretch of hitting record highs.
Nothing this good lasts at this rate in perpetuity. The Shiller CAPE ratio hovers around 40, a level that was only seen during the height of the dot-com bubble era. Although stressed valuations do not guarantee that a crash is imminent, they tend to occur before a decline in yields or significant reversals that can last for years.
S&P 500 Shiller CAPE ratio data by YCharts
How often do bear markets occur?
Bear markets – drops of 20% or more from a recent high – are not that rare. Since 1928, they have appeared on average approximately every three and a half years. However, since World War II, bear markets have become rarer, occurring approximately every five years. Bear markets are typically short-lived, lasting about nine months, and drag the S&P 500 down about 35% before bottoming out. In terms of timing alone, the imminent emergence of a new bear market is not a far-fetched idea.
The preliminary setup is familiar: stubborn inflation, sluggish economic growth, mixed with high unemployment. These indicators suggest that the economic situation is mixed and not apocalyptic. Real gross domestic product (GDP) continues to grow at around 1.5% per year, without contracting. The unemployment rate sits at nearly 4.1%, which is historically healthy. But even though inflation has eased after its 2022 peak, it remains stable, well above the Fed’s 2% target.
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