Hi,
The S&P 500 hit a record high of 7,673.52 on September 8, up 54% from its April 2025 low. But it’s also trading at a P/E of 25.51, well above its 19.1 average since 2010, and the 10-year Treasury yield just pushed close to 5%. So let’s be straight with you about what that actually means for your money.
Does a record high mean trouble is coming?
- Not necessarily. Markets can sit at elevated valuations for a long stretch before anything actually happens
- Rising yields and a stretched P/E are signals worth watching, not a prediction of exactly when or how far a pullback goes
- Anyone telling you they know precisely when the next correction hits is guessing. Nobody actually knows
So what is the real risk?
The record high isn’t the danger. It’s the warning light. Since 1950, the S&P 500 has had a correction of 10% or more roughly once every two years, with an average drawdown of around 14 to 16% top to bottom. A correction isn’t rare, it’s normal. The real risk is whether your plan was actually built to handle one when it comes:
- A 15% drop on a $500,000 balance is roughly $75,000, gone on paper until the market recovers
- Recoveries from a correction can take anywhere from a few months to a few years, depending on what triggered it
- The people who get hurt most aren’t the ones who experience a drop, it’s the ones who weren’t positioned for it going in
Who tends to feel this most:
- Retirees and anyone drawing income from their portfolio – selling into a drop to cover expenses turns a paper loss into a permanent one
- Anyone one to three years from retirement – little time to recover if a correction lands right before you need the money
- Portfolios concentrated in a handful of high flying names – the stocks that ran the hardest are often the ones that fall the hardest
- Anyone who hasn’t looked at their allocation in a while – a plan built two or three years ago may not match the risk you’re actually carrying today
The people who come through a correction without panicking aren’t the ones who predicted it. They’re the ones who already knew how much of a drop their plan could actually absorb. That is not luck. That is planning.
Because the tax side and the investment side of your life usually sit with different professionals who never talk to each other, a correction becomes the moment nobody planned for on either side, not the allocation and not the tax impact of whatever you decide to do about it. That’s exactly where things slip through the cracks.
That’s why we have an in-house, fiduciary Certified Financial Planner – someone who can sit down with you, stress test your current plan against a real correction, and tell you plainly whether it holds up or not. No sales pitch, no products to buy, just a straight answer on where you actually stand.
Reply to this email by Monday and we’ll set up a free 15 minute session with our Certified Financial Planning. Bring your most recent investment statement, and we’ll walk through exactly how your plan would hold up in a real pullback, not generalities.
This email is simply for illustration purposes and is not intended to provide investment advice.
Sincerely,
—
George Dimov, CPA
Licensed and Insured
(833) 829-1120 toll free
(212) 994-8081 Fax
www.dimovtax.com