The S&P 500 Could Do Something It’s Only Done Once In a Century. Here’s What That Might Mean. | The Motley Fool

Despite being off to a relatively shaky start this year, the S&P 500 (^GSPC 0.58%) has been on fire since it surged out of its bear market in late 2022. In fact, it could be on track to make history.

It’s incredibly rare for the S&P 500 to earn total returns of at least 20% three years straight. It has only happened once since 1928, but there’s a chance we could see it again by the end of the year.

In 2023 and 2024, the S&P 500 earned total returns of around 24% and 23%, respectively. So far this year, it’s sitting at around 14%, as of this writing. For context, on this date in 2023, the S&P 500 was only up by around 12% for the year — so don’t count 2025 out just yet.

While exceptional returns three years in a row may seem like something to celebrate, it could also suggest that we’re in an overvaluation bubble. The only other time this has happened in the last century was in the late 1990s, right before the tech bubble burst and stocks fell into one of the longest bear markets in U.S. history. Here’s what might be ahead for the market.

One market indicator has a warning for investors

To be clear, nobody — even the experts — can predict with 100% accuracy where stocks will be in a few months or when the next downturn will begin. The market can be incredibly unpredictable in the short term, and even the most knowledgeable investors often get it wrong.

That said, it can still be helpful to look at historical context to see what has happened with similar market cycles.

One stock market metric that can be beneficial in seeing whether the market is overvalued is the Buffett Indicator. This indicator measures the ratio between the total value of U.S stocks to GDP, and it gained its nickname after Warren Buffett famously used the metric to predict the dot-com bubble burst of the late 1990s.

In a 2001 interview with Fortune Magazine, Buffett noted that it’s generally safest to invest when the ratio is between 70% and 80%. However, he noted that “if the ratio reaches 200% — as it did in 1999 and a part of 2000 — you are playing with fire.”

So where does the Buffett Indicator stand right now? As of October 2025, it’s close to 221%. That’s the highest it’s ever been, and it could suggest that the stock market is in uncharted territory.

Should you be worried about investing right now?

It’s important to note that no stock market indicator is accurate all of the time, and some experts criticize the Buffett Indicator for not being as accurate as it once was.

Because this indicator compares total market value to GDP, higher company valuations will drive up the ratio. The tech industry has grown at breakneck speed over the last couple of decades, and these companies have far higher valuations than even the largest organizations 30 years ago. That doesn’t necessarily mean these stocks have all been overvalued for years; rather, valuations have simply increased over time.

^SPX data by YCharts

It may not be fair, then, to use the same metrics to compare today’s companies to those from decades ago. In fact, the last time the Buffett Indicator ratio dipped below 80% was in 2012. If you’d held off on investing after that for fear that the market was close to becoming overvalued, you’d have missed out on life-changing wealth.

In other words, stock market metrics — like the Buffett Indicator or the S&P 500’s potential three-peat — can be helpful in some cases to gain context. However, they’re not always an accurate prediction of what’s to come.

We will see a stock market downturn at some point, as prices can’t keep soaring forever. But rather than getting hung up on precisely when it might happen, it’s often better to keep investing as usual, stay focused on the long term, and double-check that your portfolio is prepared to weather any potential stock market storms just in case.