Overview
- Early September markets sit near multi-year and record highs even though long-run valuation gauges such as the Shiller CAPE signal unusually high risk.
- The 2017 Tax Cuts and Jobs Act helped cut the top corporate rate to 21 percent and fueled record share buybacks that have been a major driver of the strong equity returns under President Trump.
- Since January 2025 tariff policy has shifted repeatedly and publicly, producing abrupt market moves such as the April 3, 2025 sell-off that hit major tech names and the Oct. 10, 2025 threat that erased roughly $2 trillion in market value before being reversed.
- Volatility has concentrated in individual stocks rather than indexes, with CBOE data showing a record gap between single-stock and index volatility of about 31 percent in July 2026, increasing idiosyncratic risk for stock pickers.
- Political and monetary uncertainty is intensifying near-term risk: prediction markets show a material chance of Democrats winning at least one chamber and CME FedWatch prices a meaningful likelihood of a September rate hike, which has prompted many columnists to recommend steady dollar-cost averaging into low-cost ETFs such as VOO and VTI as a practical long-term approach.