The S&P 500 is trading at a trailing P/E of 31.8x. The long-term average is around 17.6x. The 10-year average is about 23x. So we're not "a little elevated." We're stretched.

And if you're wondering what the bull case is from here, the answer is baked into the forward P/E: 27% earnings growth over the next 12 months. That's what analysts are pricing in with a forward P/E of 23.2x. That's a lot to deliver on.

Here's the math that should make you uncomfortable: The 10-year Treasury is yielding around 4.3% risk-free. The S&P 500's earnings yield, which is just the inverse of the P/E ratio, is sitting at 3.1%. You're earning less on equities than on Treasuries, and equities come with all the risk.

That only makes sense if the growth actually materializes. If earnings don't grow 27%, today's valuations start looking very hard to justify.

Let's break down what's driving this:

Technology is trading at a trailing P/E of 46.5x and represents 33.9% of the index. One sector, at nosebleed valuations, is doing a lot of heavy lifting on the overall number. Within tech, you've got individual names like Tesla at 394x trailing, ON Semiconductor at 400x, and Palantir at 217x. Those multiples assume flawless execution and massive growth for years.

Meanwhile, the Russell 2000 is trading at 17.9x trailing, actually below the long-term average. Small caps have been beaten up, and the valuation gap between large caps and small caps is unusually extreme right now. Energy and financials are the only large sectors that look anywhere near fairly valued, at 23x and 18.5x respectively.

So the S&P 500's valuation isn't evenly distributed. It's concentrated in a handful of mega-cap tech stocks that are priced for perfection.

Here's what worries me: Valuations are a terrible timing tool. The market can stay expensive for years. But the margin for error is very thin right now. If earnings growth comes in below expectations, or if the Fed holds rates higher for longer, or if literally anything goes wrong, these multiples are going to feel uncomfortable very quickly.

The equity risk premium, which is the extra return you're supposed to get for taking on stock market risk versus Treasuries, has basically disappeared. You're not getting paid to take risk right now. You're paying for the privilege of hoping that 27% earnings growth actually happens.

I'm not saying a crash is coming. I have no idea when valuations will revert, or if they will at all in the near term. Markets can stay irrational longer than you can stay solvent, as the saying goes.

But I am saying this: A lot of optimism is already priced in. The bull case requires everything to go right. And when you're earning 3.1% on stocks versus 4.3% risk-free on Treasuries, you have to ask yourself if the risk-reward makes sense.

If you're a retail investor sitting on cash, or thinking about adding to equities, or just trying to figure out if this is a good entry point, the valuation data is telling you to be cautious. Not panicked. Just cautious.

The market might keep climbing. It has before at similar valuations. But the math is the math, and right now, the math says you're paying a premium for growth that hasn't happened yet.