Everyone seems to know feel that valuations are high. J.P. Morgan recently released data showing that when the S&P 500 trades at forward P/E ratios around 22x (where we are now), subsequent 10-year returns have historically ranged between +2% and -2%.
For example -> Japan in 1989 was unstoppable and from a period of 15 years (1974 to 1989), the Nikkei 225 had gone up over 10x from 3600 to over 36,000. Then had 30 years of a rollercoaster after 1990 before crossing 36,000 again in 2023.
What nobody seems to talk about is what we're supposed to *do* about it. Going through it, the standard options have problems:
* **Treasuries**: 4-5% nominal, maybe 1-2% real adjusted for inflation. And then you have to time your re-entry.
* **Gold**: Crushed it from 2000-2010 (+15% CAGR) while the S&P was flat (and now). But from 1980-1999, gold returned -6.5% annualized while stocks did +13%.
* **International**: "Cheaper" for a decade now, but anyone who diversified has underperformed unless they did it last year.
Classically it seems like most people take the route of doing nothing. Historically includes a lot of people who waited 10-30 years.
The S&P 500 has done something similar in the last 16 years. Going from a low of 677 on March 2009 to 6900+ today in Jan 2026. Also 10x growth within a similar time period.
Obviously a lot of what everyone is scared about is the AI bubble. Meanwhile in Japan back in 1989 I looked it up on Reddit and [anecdotes from that time make it sound more insane](https://www.reddit.com/r/japanlife/comments/yur6j3/those_of_you_who_were_in_japan_during_the_bubble/). P/E ratios back then were also 60 to 80 for companies.
So basically 10 to 30 years of bad returns is not unprecedented. Still Japan at least had deflation / low inflation. I'm curious on how everyone is thinking about potentially hedging.