S&P 500 Up 11% YTD; Prepare for Potential Market Crash

The S&P 500 (SNPINDEX: ^GSPC) is up 11% year-to-date and may achieve four consecutive years of double-digit gains if it maintains this trend through the end of 2026. In 1999, the last time this occurred, the market subsequently crashed, losing nearly 50% over three years. Currently, the cyclically adjusted P/E ratio (CAPE) is at its second-highest level ever, signaling a potentially overvalued market. Investors are advised to consider creating a defensive portfolio in light of these economic indicators, particularly as interest rates continue to rise.