The S&P 500 just flashed a rare market warning -- and could change how Canadian investors think about risk moving forward

A warning highlighted by the article centers on valuation: the S&P 500’s Shiller Cyclically Adjusted Price-to-Earnings (CAPE) ratio has climbed to about 41.33 in May 2026, a level reached only twice in the past century, with the prior occurrence during the late-1990s dot-com bubble. The CAPE ratio, created by economist Robert J. Shiller, compares current stock prices with inflation-adjusted earnings from the prior 10 years. The piece says a high CAPE often corresponds to lower long-term returns, though it cannot pinpoint when a market correction or recession will begin. It also contrasts the U.S. with Canada, noting that as of January 1, 2026, Canada’s S&P/TSX Composite had a CAPE of 26.20—high, but well below the U.S. figure. The article frames CAPE as a risk-management tool rather than a market-timing indicator.