The global stock market's record-breaking rally is showing signs of vulnerability, with strategists warning that a long-awaited correction may be imminent as lofty valuations collide with mounting geopolitical and policy risks.

The MSCI All Country World Index hit a fresh all-time high this month after surging 20.6% in 2025 and gaining over 2% already this year. However, the absence of a meaningful pullback for more than nine months has left markets historically overdue for a downturn, according to Goldman Sachs.

"Markets, having had a very good 2025... and having gone over nine months without a meaningful pullback, the historical clock is ticking," said Timothy Moe, the firm's chief Asia-Pacific equity strategist. He noted that corrections of 10% or more typically occur every eight to nine months.

Investors have largely shrugged off geopolitical tensions—from Greenland to the Middle East—and political rhetoric, betting on the so-called "TACO" trade ("Trump Always Chickens Out"). Yet Moe warned that complacency is dangerous: "Markets tend to ignore geopolitical risk until it really matters."

Kevin Gordon of the Schwab Center for Financial Research agreed that correction risks are rising, particularly with valuations stretched and sentiment frothy. "When valuations are stretched and sentiment is frothy, there is a stronger chance for pullbacks to be more severe," he said, though he emphasized a negative catalyst—such as a policy shift or earnings disappointment—would likely be needed to trigger a selloff.

Technical signals also hint at late-cycle behavior, with market leadership narrowing around megacap stocks. Jay Woods of Freedom Capital Markets noted that the Nasdaq 100 hasn't made a new high since October and could be the first major index to correct.

Despite the caution, many analysts remain broadly bullish, especially on Asian equities, but stress that risk management has become increasingly critical as the rally extends into uncertain territory.