Is the S&P 500 still worth it — and is it riskier than ever?

Short answer: Yes, riskier than ever on most objective measures. No, that doesn't mean stop investing. But it means understanding what you're actually buying.

The valuation picture (May 2026)

The S&P 500 sits at ~7,411, and the Shiller CAPE ratio is around 41.6 — more than twice the long-run average of 17.3, and the second-highest reading in 140+ years of US market history. Only the December 1999 dot-com peak of 44.19 was richer. Implied future annual return at this level: ~1.5%. GotradeGuruFocus

For context: today's reading sits well above the 1929 pre-crash level (~32) and the 2007 pre-financial-crisis peak (~27). Gotrade

The concentration problem

This is the bigger structural issue, and it's genuinely unprecedented:

The 10 largest companies now control roughly 40% of the entire index by market cap — exceeding the dot-com bubble peak, when the top 10 held around 27%. INDmoney

In a recent 28-session rally between late March and early May 2026, just 10 stocks drove 69% of the index's gains. INDmoney

Semiconductor stocks alone represent over 23% of total market cap. 24/7 Wall St.

NVIDIA alone represents nearly 8% of the index — a single earnings miss now meaningfully moves the whole index. RBC Wealth Management

The average P/E of the top 10 is nearly 57% higher than the other 490 companies. Tema

The market-cap-weighted S&P 500's three-year outperformance vs. equal-weighted is one of the largest on record, exceeding the ~31% gap seen in the run-up to the tech bubble. RBC Wealth Management

What you think is "buying America's 500 best companies" is functionally a concentrated AI/mega-cap tech bet.

What the smart money is doing

Buffett is the loudest signal. Berkshire Hathaway holds $397.4 billion in cash and cash equivalents — a record, after 12 consecutive quarters of net selling, the longest net selling streak in the company's history. Berkshire has outperformed the S&P by roughly 23 percentage points YTD in 2026, with the index down ~11%. Buffett Online + 2

He's not predicting a crash. He's saying the price isn't right.

The counter-argument (because it matters)

It's not 1999 redux. Today's mega-caps have genuinely superior margins, returns on capital, and growth profiles vs. the dot-com leaders — the valuation gap reflects fundamentals, not pure speculation. From January 1975 through January 2026, the S&P 500 rose nearly 6,700% vs. a 524% CPI increase. Sitting out costs you. Even Buffett still recommends index funds for individual investors. GuinnessgiCNBC

My read for you

Three honest conclusions:

Don't stop. Stopping monthly DCA into broad equities because valuations look stretched has been the wrong call for 15+ years running. Time in market still wins.

Don't pretend it's diversified. Cap-weighted SPY today is a tech/AI concentration bet. If you also hold QQQ, individual NVDA, or AI-adjacent private positions, you're tripled up without realizing it.

Equal-weight or international is the cheap hedge. RSP (equal-weight S&P) or ex-US developed markets (Europe, Japan trading well below their averages) reduce the concentration without exiting equities.

The risk isn't a 2000-style crash. The risk is a lost decade of 1-2% real returns from these entry points while you assumed you'd get 8%.