The Warning Lights are Flashing Down at Quality Control
Sep 18, 2025
I spent the last week thinking about how could I explain that historically, this is one of the most dangerous times I've seen as a 25 year investor.
So here is this week's missive.
BE CAREFUL OUT THERE
That's it. That's the message.
Valuations are sitting at levels that have rarely been seen in market history. The S&P 500’s CAPE ratio is above 30, a zone that has historically preceded long stretches of below-average returns. In the last century, markets trading at these levels (1929, 2000, 2021) delivered poor outcomes for investors who ignored risk.
At Total Money Management, we remind our community that expensive markets don’t mean an immediate crash, but they do shift the odds. Historically, when markets trade more than 60 percent above their long-term average valuation, future 10-year returns have averaged less than 3 percent per year. Compare that with periods of undervaluation, where returns averaged closer to 10 percent.
The lesson is simple: don’t be lulled into complacency. Price matters.
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