Investment-grade corporate bonds and U.S. Treasury bonds have recently seen their tightest credit spread since 1998, similar to the dot-com bubble. The S&P 500’s CAPE valuation multiple is at its highest since the dot-com crash in 2000, indicating an expensive stock market. Historical data suggests the S&P 500 could decline by 3% in the next year, 19% in two years, and 30% in three years, signaling a high-risk, low-reward scenario for investors. This environment calls for caution in stock investments and a focus on high-conviction ideas. Bond and stock markets may face negative consequences if the current narrative is disrupted.

Read more at Nasdaq.: The Stock Market and Bond Market Flash Warnings Not Seen in Decades. History Says the S&P 500 Will Do This Next.