The Stock Market Is Flashing a Warning Seen Only 6 Times Since 1871, and History Is Crystal Clear That a Disaster Could Be Heading Toward Wall Street
The S&P 500 CAPE ratio is a useful valuation tool to determine whether the market is expensive or fairly priced.
Overview
There is a reason the S&P 500 (SNPINDEX: ^GSPC), Dow Jones Industrial Average (DJINDICES: ^DJI), and Nasdaq Composite (NASDAQINDEX: ^IXIC) are among the greatest wealth creation vehicles in financial history.
With indexes, you don't need to time the market or pick the next Nvidia (NASDAQ: NVDA). You also don't need to hop from gold to oil to real estate every time an economic outlook shifts. Over decades, owning productive businesses has been one of the most reliable passive ways to build wealth.
Details
Simply put, companies generate earnings, reinvest capital, create new products, authorize share buybacks, and issue dividends, all while growing alongside the economy. This compounding effect is difficult for alternative assets to replicate over a long-term horizon.
Source
Originally published at www.fool.com.