2026 Market Crash Signs 📉 | Sarthak Ahuja

The world today is showing 3 signs that are very similar to what happened exactly before the Great Depression in 1929, and the Dot Com Bubble in the year 2000...

👉🏼 First, the stock market valuation multiples... in the Cyclically Adjusted Price to Earnings (CAPE) Ratio or the Shiller PE Ratio...

This ratio looks at the market cap or value of a company divided by the past ten years average earnings after adjusting for inflation.

It provides a smoother, long term view of valuations... and looks at whether stocks are overvalued or undervalued from a long term market cycle perspective.

This ratio was above 32 in 1929... had again crossed 32 in the year 2000... and is currently at 39, which seems absolutely obnoxious...

👉🏼 The second big factor is the concentration of valuation of the market index or the S&P 500 among a few companies...

the Magnificent 7 companies that are all into AI, now contribute to 49% of the S&P 500...

Which means just one correction in AI valuations will lead to a fall in the entire market...

👉🏼 Third, is the yield curve inversion...

Which is considered as the most reliable recession indicator today...

This happens when interest rate for short term deposits with banks are higher compared to long term deposit rates...

It predicts economic downturns within 12-18 months... and this inversion was seen in the US from Oct 2022 to Dec 2024...

While this has currently normalised... analysts are predicting US markets could fall by 30-40% in the next 12 months, which would have a ripple down effect all over the world.

👉🏼 To counter this... it is recommended to spread investments across asset classes such that most prudent and cautious advisors are suggesting holding 25% of your portfolio just in the form of a simple bank deposit.

Another 20% in gold... and reducing the exposure to stocks before a major fall.

👉🏼 No one can predict market movements, and I definitely cannot. But the signs may suggest efficient diversification of assets and being slightly cautious, not taking risky bets at the moment.

Wealth preservation may be a better strategy at the moment that trying to increase financial returns.
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A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.
Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of '17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years.