The short answer to the question of whether a market crash is coming is yes. It’s a trick question and answer, of course, because there’s bound to be a market crash at some point, but no one can tell you when that’s going to be.
The reason it feels more urgent today is that there are indications that it’s going to happen sooner rather than later. The CAPE ratio, a metric that measures the average price-to-earnings ratio for the S&P 500 (SNPINDEX: ^GSPC) and adjusts for inflation, is nearing a level it reached only one time before, precipitating a market crash. The Buffett indicator, which measures the total value of the stock market relative to U.S. gross domestic product, is at 210%, and values over 100% start to look expensive.
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The underlying thread is that the market is expensive right now. An inflated market can be likened to a bubble, which might eventually burst; there’s only so much air it can hold.
What should investors do? Look to Warren Buffett for the answer.
Through thick and thin
Warren Buffett built up Berkshire Hathaway‘s cash stores to their highest-ever levels while he was CEO and sold more stocks than he bought for several quarters before he stepped down at the end of 2025. However, there wasn’t a single quarter when Berkshire Hathaway didn’t find something to buy. That’s significant because Buffett is a value investor who looks for undervalued stocks. The implication is that there’s always something to find in the markets.
“Keep buying it through thick and thin, and especially through thin,” he said in an interview in 2017.
Staying invested generates the best results. As investors have seen over the past few years, the market can remain elevated for a long time without declining, even when it looks expensive. It would be a shame to miss opportunities out of fear of a market crash, and you can’t time the market.
A Charles Schwab study put market timing to the test and found that, given the impossibility of perfect market timing, consistent investing across all market conditions yielded the best results. It tested the theory across 80 different 20-year periods, and they all demonstrated the same outcome.
Another interesting corollary is that every type of investor, even those with poor timing, did fairly well. The only type who didn’t was the non-investor, or the person who never got around to investing at all.
