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Peter Schiff thinks investors are walking into a trap.
In April 2026, the economist and longtime contrarian investor told TheStreet that investors were ignoring major risks as stocks climbed to fresh all-time highs — and warned that the U.S. market could be setting itself up for a painful reckoning (1).
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“I think investors have gotten a lot of things wrong, but that hasn’t stopped the market from going up,” Schiff said in the interview. “The majority of investors don’t understand the fundamentals. And they buy stocks anyway.”
So, months after Schiff issued that warning, has the market proved him right?
Not exactly. U.S. stocks have continued to climb since Schiff made his comments, even as some of the risks he highlighted — including high valuations, inflation and the country’s growing debt burden — remain in focus.
As of Aug. 11, the S&P 500 was up 12.9% for the year, while the Nasdaq had gained 13.8% (2). Both indexes remained close to recent record highs, showing the rally has continued since Schiff issued his warning.
But Schiff argues the rally is being built on shaky ground. “In the long run, the fundamentals are going to ultimately bring the market back down,” he said.
And he isn’t warning about a garden-variety correction.
“Even if everything was good, the U.S. market is expensive,” Schiff said. “But it’s not — it’s a ticking time bomb.”
In his view, investors are looking past too many warning signs. “The markets, I think, are really looking past a lot of problems and pricing stocks based on hope and not reality,” he said.
However, there are still reasons for investors to pay attention to that argument.
The S&P 500’s cyclically adjusted price-to-earnings ratio, or CAPE, remains above 40 — a historically elevated level that has been associated with lower long-term returns, although it’s not always a reliable tool for predicting exactly when a market crash will occur (3).
But according to Schiff, the fragility isn’t limited to the stock market.
