Although it was only created in 1988, the CAPE ratio has been retroactively calculated back to 1871, giving us 155 years of history to evaluate. And things look ominous.

...must come down

Since 1871, the CAPE ratio has been above 24 on only six occasions (a higher number means the market is pricier):

1. In 1901, just before the Panic of 1901.

2. In the late 1920s, just before the Great Depression.

3. In 1966, just prior to the stagflation era.

4. In the late 1990s, before the dot-com bubble burst.

5. In the late 2000s, prior to the Great Recession.

6. Right now.

That's a 100% correlation of a high CAPE ratio preceding a major market downturn.

The CAPE ratio currently sits at 36.48, not far from its all-time high of 44.2. So if you've been thinking stocks in general look pricey right now, you're not wrong. That should make investors very nervous.

This doesn't mean a stock market crash is going to happen tomorrow, or even this year. Before the dot-com bust, the CAPE ratio surpassed 24 in 1995, and the reckoning didn't come until 2000. But the ratio's flawless track record suggests there's a high probability of a bear market starting before President Trump leaves office, and maybe even sooner than that.

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