If a Stock Market Crash Is Coming, These 2 Growth Stocks Might Be Worth Selling
Stocks with lofty valuations can be extra vulnerable when the broader market suffers a correction.
Overview
Driven largely by the ongoing artificial intelligence (AI) boom, the benchmark S&P 500 (SNPINDEX: ^GSPC) index has more than doubled from its bear-market low point in 2022, so investors have enjoyed spectacular returns over the last few years.
But the index currently trades at a Shiller Cyclically Adjusted Price-to-Earnings (CAPE) ratio of 41.9, making it the second-most expensive market in history, behind only the dot-com bubble in 2000. With ongoing geopolitical tensions in the Middle East, elevated inflation, rising government bond yields, and the upcoming midterm congressional elections in November, this may be a good time for investors to trim their market exposure.
Details
Stocks with high valuations tend to be the most vulnerable to steep declines during broad-market sell-offs, as investors tend to take such events as cues to cash out of their bigger winners and reduce the level of risk in their portfolios. I've identified two popular technology stocks trading at sky-high valuations now that might be worth selling if the S&P 500 starts to head south.
Source
Originally published at www.fool.com.