The panic of 1901 was the first crash on the New York Stock Exchange, brought on by a battle for control of the Northern Pacific Railway.  June 1901 marked the peak in valuations for 27 years, only to be eclipsed in the months preceding the September 1929 peak in stock prices.  Between June 1901 and December 1920, the 10 year real P/E (Shiller CAPE) fell from 25x to 5x.

In real terms, the S&P index (and its predecessor prior to 1923) fell some 69% during this time.

In April 1899, the consumer price index turned positive on a year over year change basis for the first time in 16 years.

Why do we recall this history?  The basic point is that bad things can happen when valuations get rich, and as of March 2014, CAPE based valuations are back above 25x.  Absent the decade between 1996-2007, the S&P has sold at a CAPE above 25x for only very brief periods of time.  June 1901 was the only month valuations peaked above 25x until 1929 when valuations were above 25x from November 1928 through April 1930.  So, if we exclude the biggest stock market bubble in history (NASDAQ 5,000…a huge outlier!), current valuations have only been seen for 18 months out of the last 123 years.