Donald Trump once predicted that a war with Iran would cause the stock market to drop by 20%-25%, and analysis suggests his prediction could still come true.

Former U.S. President Donald Trump stated in May of this year, when discussing a war with Iran, that he had expected the stock market to fall by 20%-25% due to the war. Although the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite Index have all reached historical highs, analysis suggests that the impact of an Iran war on inflation and the current high valuations in the stock market could make Donald Trump's prediction a reality in the future. After the U.S. military attacked Iran on February 28, Iran closed the Strait of Hormuz, disrupting one-fifth of the world's liquid oil supply and driving up energy prices and core Personal Consumption Expenditures (PCE) inflation. Furthermore, the Shiller P/E Ratio for the S&P 500 approached 43x in early June, significantly higher than its long-term average of 17.4. Historically, the five times this ratio has exceeded 30x have all been followed by significant stock market declines.