Historically, record-high household exposure suggests that the marginal buyer has already entered the market. But what happens when everyone is all-in? There are a few possible scenarios:
An increase in leverage to chase further gains, which drives extreme volatility.
Any further gains are essentially a reflection of newly created money rather than productivity.
Smart money begins to exit, searching for a better store of value.
While we’ve seen similar setups in 2000 and 2007, 2026 may offer a different outcome. A CAPE ratio hitting 45 is a clear admission that price has detached from earnings, but it also indicates that people are searching for a better store of value than the dollar.
Historically, record-high household exposure suggests that the marginal buyer has already entered the market. But what happens when everyone is all-in? There are a few possible scenarios:
While we’ve seen similar setups in 2000 and 2007, 2026 may offer a different outcome. A CAPE ratio hitting 45 is a clear admission that price has detached from earnings, but it also indicates that people are searching for a better store of value than the dollar.