The Market Just Hit a Risky Milestone. History Says Investors Should Make This 1 Move.
The S&P 500 Shiller CAPE Ratio is over 40x, the highest level since the dot-com bubble.
Overview
Jamie Dimon, CEO of JPMorgan Chase (NYSE: JPM), eloquently described the risks the market faces today as "tectonic plates" that are "shifting below the surface." He highlighted risks such as geopolitical conflict, high debt levels, and inflation. But he also included elevated asset prices on his list. As if on cue, the S&P 500 Shiller CAPE Ratio is flashing a warning sign about the extreme valuation of the market. Here's what you need to know.
First and foremost, it is important to state the obvious: Nobody knows what the future holds. Which is why Jamie Dimon prefaced his market warnings by saying, "We cannot predict how these forces will ultimately play out. They may remain manageable." However, he added that his list of tectonic plates "could also cause meaningful disruptions when they shift or collide." The takeaway is that investors are always balancing risk against reward. Right now, risk appears to be elevated.
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Originally published at www.fool.com.