After years of relentless gains, U.S. stocks may have finally overreached. A growing number of respected analysts and institutions now warn that equities are dangerously overvalued and a correction could be on the way. Now may be the time to start thinking defensively.
With market indexes like the S&P 500 and Nasdaq near all-time highs, the temptation is to stay the course. But history and valuation math tell a more sobering story. Many leading voices are urging investors to rebalance now, away from U.S. equities and into safer, more reliable assets. One of those assets? Physical gold.
Breaking From the Herd
It’s rare for investment strategists to break from the market's prevailing optimism, but that’s exactly what Vanguard’s investment chief Greg Davis did recently. Davis explained that U.S. stocks are “a victim of their own success,” having delivered such strong gains in recent years that future returns will likely disappoint.
“Our projection is that U.S. equity market returns are going to be much more muted in the future,” Davis warns. Vanguard expects the S&P 500 to deliver only 3.8% to 5.8% annually over the next decade. That's less than half of the 12.4% average of the last 10 years. Their math is grounded in valuation: the S&P 500 currently trades at a P/E multiple of 29.3, far above historical norms. Using Robert Shiller’s CAPE ratio, Vanguard calculates that U.S. equities are nearly 50% above fair value.1
Davis isn’t alone. Eric Teal, Chief Investment Officer at Comerica Bank, says flat returns are a reasonable expectation for 2025 given how far the market has run. He joins other experts in citing a toxic mix of elevated valuations, geopolitical uncertainty, and unpredictable policy moves as reasons to be cautious.2
T. Rowe Price holds a neutral position on U.S. equities, concerned that today’s valuations are only sustainable if current profitability holds, which is far from guaranteed. 3 And Morningstar's Q3 2025 outlook bluntly states that volatility and muted gains lie ahead, highlighting that much of the stock market’s recent upside may already be baked in. 4
Consensus: It’s Time to Rebalance
Across the board, there is agreement that investors need to rebalance away from U.S. stocks. The traditional 60-40 portfolio has been distorted by runaway equity gains and bond underperformance over the past decade. According to Vanguard, an investor who started with 60% in stocks and 40% in bonds a decade ago, and didn’t rebalance, now likely holds an 80-20 mix, heavily overweight in equities.
Making matters worse, U.S. stocks have outpaced international equities over the past decade. That outperformance has quietly distorted many investors’ portfolios. As Vanguard’s Joseph Davis points out, someone who started with a typical 70/30 split between U.S. and international stocks ten years ago would now be holding 80% U.S. and just 20% foreign, without ever lifting a finger.5
In real terms, that means an investor’s U.S. equity exposure would have ballooned from 42% of their overall portfolio to nearly two-thirds. That’s a dramatic and potentially dangerous imbalance. According to Davis, many portfolios today are skewed in the wrong direction, overexposed to stocks in general and underexposed to both bonds and international holdings. That overexposure is set to cause real damage when a correction occurs.
Institutions are urging investors to shift focus, to bonds, international equities, and safer havens like gold. Vanguard suggests a radical rebalancing to 60% fixed income and 40% equities, with just 20% allocated to U.S. stocks.6
The Macro Picture Adds to the Risk
Even if earnings remain strong, macroeconomic headwinds threaten the bull market. Tariffs, rising inflation, a cooling labor market, and political instability are making the outlook murky. The U.S. GDP is forecast to slow from 2.8% in 2024 to just 1.6% in 2025, while inflation is expected to edge toward 4%, according to OECD projections. That combination of slowing growth and rising prices, stagflation, is an investor’s worst enemy.7
Société Générale’s Albert Edwards, one of the few analysts to call the 2000 dot-com crash in advance, believes we’re in the middle of an “everything bubble.” He cites historically high valuations across stocks and housing, combined with rising long-term interest rates, as signs of systemic overvaluation. “I don't expect the market will be able to ignore it much longer,” he says.8
Why Gold Makes Sense Now
In times of uncertainty, historically inflated valuations, and muted forward returns, physical gold has served as a proven hedge. Gold has no earnings reports to miss, no CEOs to disappoint, and no balance sheets to blow up. It thrives when confidence falters. And that moment may be approaching.
When stock prices are stretched and vulnerable to a downturn, gold offers safety. Unlike equities, gold doesn’t rely on rosy economic forecasts or political stability. And unlike bonds, it doesn’t lose value when inflation flares. In fact, gold has often outperformed both during periods of stagflation and market volatility.
Conclusion
This isn’t about fear. It’s about prudence. So many respected voices, from Vanguard to T. Rowe to leading economists, are calling for lower returns and flashing red lights on valuations. Those looking to protect their funds would be wise to consider their advice. Sell high. Rebalance smartly. And protect your portfolio with physical gold, a timeless asset built for uncertain times. To learn more how a Gold IRA can safeguard your future, call American Hartford Gold at 800-462-0071 today.
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Max Baecker is the President of American Hartford Gold (AHG), the nation’s largest retailer of precious metals. He leads American Hartford Gold’s mission to help clients achieve long-term financial security with physical gold and silver.
Under his guidance, American Hartford Gold has delivered billions of dollars’ worth of precious metals to thousands of satisfied clients.
Max's dedication to upholding American Hartford Gold's industry-leading standards is reflected in its accolades. American Hartford Gold has made numerous high-ranking appearances on the prestigious Inc. 5000 List of America’s Fastest-Growing Private Companies. AHG holds an A+ Rating from the BBB and a 5-Star Rating on Trustpilot from thousands of American Hartford Gold reviews. American Hartford Gold is the only precious metals company trusted and recommended by Bill O’Reilly.
AHG offers investment-grade gold and silver coins and bars at competitive prices. Clients also benefit from its buy-back commitment with no back-end fees. To learn more, visit American Hartford Gold.
Notes:
1. https://fortune.com/2025/07/24/the-investment-chief-at-10-trillion-giant-vanguard-says-its-time-to-pivot-away-from-u-s-stocks/
2. https://www.usatoday.com/story/money/2025/06/28/stock-market-sp-500-forecast-2025-tariffs-recession/84353446007/
3. https://www.etftrends.com/active-etf-channel/2025-t-rowe-price-equity-outlook-international-inflation/
4. https://www.morningstar.com/markets/4-key-market-factors-track-q3-2025-2
5. https://fortune.com/2025/07/24/the-investment-chief-at-10-trillion-giant-vanguard-says-its-time-to-pivot-away-from-u-s-stocks/
6. https://fortune.com/2025/07/24/the-investment-chief-at-10-trillion-giant-vanguard-says-its-time-to-pivot-away-from-u-s-stocks/
7. https://www.schwab.com/learn/story/us-stock-market-outlook
8. https://www.businessinsider.com/stock-market-crash-famed-market-bear-warns-of-everything-bubble-2025-7
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