Will There Be a Stock Market Crash Under President Donald Trump? One Forecasting Tool With 155 Years of History in Its Sails Offers an Answer.

The article argues that the S&P 500's Shiller P/E ratio of 40.44 is flashing a historically reliable warning sign for a possible stock market crash, noting that readings above 30 have previously preceded declines of 20% to 89%. It also highlights record S&P 500 share buybacks likely topping $1 trillion in 2025 and strong index gains under Trump, but frames those positives against elevated valuations and downside risk. Overall, the piece is a cautionary market-timing warning rather than a direct company-specific catalyst.

Analysis

The market takeaway is not “Trump equals higher returns,” but that policy has reinforced an already stretched liquidity/earnings regime: lower corporate tax friction plus record buybacks mechanically suppress free-float supply and create a self-reinforcing bid for large-cap indices. That matters most for mega-cap growth where a small change in buyback intensity can offset meaningful multiple compression, and it explains why index-level resilience can persist even as breadth deteriorates. The second-order effect is that capital returns are increasingly concentrating performance in firms with large domestic cash generation, while businesses dependent on external financing face a higher hurdle rate if rates stay sticky.

The real risk is horizon mismatch. The CAPE signal is useful for identifying regime fragility, but not timing; over the next few weeks the market can easily ignore it if earnings revisions hold and AI capex remains a dominant narrative. Over the next 6-18 months, though, valuation plus crowded positioning creates asymmetric downside if any of three catalysts hit: a tariff-driven margin squeeze, a payroll/consumer slowdown that undermines earnings beats, or a policy shift that interrupts the buyback engine. In that setup, the first casualties are the most duration-sensitive names, not necessarily the index immediately.

The most interesting contrarian point is that AI beneficiaries are both the reason valuations can stay elevated and the place where the air pocket could be deepest if sentiment breaks. NVDA remains structurally advantaged, but its implied perfection leaves little room for even a temporary digestion phase in AI spend; INTC is more of a relative-value beneficiary because any reshoring/industrial policy narrative lowers its execution bar while upside is more operating-leverage driven. NFLX is largely insulated from the macro debate, which makes it a cleaner defensive growth expression if equity multiples de-rate broadly.

Key Decisions for Investors

• Reduce net exposure to broad U.S. beta via SPY or QQQ put spreads 3-6 months out; use rallies to finance, targeting a valuation-driven drawdown rather than a recession call.
• Rotate within semis: underweight NVDA vs long INTC on a 3-9 month horizon as a relative-value hedge against AI multiple compression; NVDA still wins fundamentally, but the setup is more crowded and less forgiving.
• Own NFLX as a defensive growth hold or long vs QQQ in a pair trade; it has lower policy/tariff sensitivity and less direct exposure to capex cycle disappointment.
• Add to high-quality cash return names with durable buybacks only on weakness; the buyback bid is supportive, but focus on firms with operating cash flow coverage rather than financial engineering.
• If the S&P 500 CAPE stays above 40 while earnings revisions flatten, initiate a tactical short basket of the most duration-sensitive mega-cap growth names against long value/cash-flow compounders over the next 1-2 quarters.