The Market Is Flashing a Valuation Warning -- but History Shows These Stocks Can Handle the Turbulence
Investors may want to brace for turbulence. But these stocks should hold up well.
Overview
Stocks are so expensive that Warren Buffett says that investors are "gambling." The market valuation indicator named after the legendary investor, the Buffett indicator, is over 230%. Buffett once said that when this indicator, which measures the ratio of total stock market capitalization to U.S. GDP, approaches 200% that, investors are "playing with fire."
Meanwhile, another widely followed valuation metric -- the S&P 500 (SNPINDEX: ^GSPC) Shiller CAPE (cyclically adjusted price-to-earnings) ratio -- is at its second-highest level ever. The highest point for the indicator was in early 2000, right before the dot-com bubble burst.
Details
There's no question that the stock market is flashing a valuation warning right now. The good news, though, is that history shows some stocks can handle the turbulence that's likely on the way. I think that three stocks especially fit the bill.
Source
Originally published at www.fool.com.
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