For the First Time in Over 155 Years, the Stock Market May Be Headed Here -- and It's Not Good News for Investors

The S&P 500 has more than tripled investors' money over the past decade.

AI-fueled speculation has driven the stock market closer to its priciest valuation ever.

History shows that periods like these are often followed by sharp reversals.

Over the past decade, the S&P 500 (SNPINDEX: ^GSPC) has delivered a phenomenal total return of around 250%, compounding at roughly 13.4% annually. Over the last year alone, the stock market, driven by developments in artificial intelligence (AI), has surged almost 23%, with its ferocity drawing comparison to some of the strongest bull runs in market history.

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The stock market is currently trading near its most expensive valuation ever . That's not an exaggeration. The last time the market was this richly valued, it was in the months preceding one of the ugliest crashes Wall Street has ever seen -- the dot-com debacle of the early 2000s.

What do I mean by "richly valued"? In simplest terms, today's investors are paying more for each dollar of corporate earnings than at almost any point in history. One way to measure that is the Shiller CAPE ratio, which compares the current price of an index (like the S&P 500) to inflation-adjusted earnings over the previous 10 years.

Thanks to some clever statistical work, the CAPE ratio, introduced in the late 1980s, has been backtracked to 1871, giving us 155 years of historical context. Over that time, CAPE has averaged about 17. Take a gander at where it is now.