The Stock Market Is Repeating a Pattern Not Seen in Decades. Here's What History Says Comes Next.
Last time, it didn't end well for many investors, but there are key differences this time.
Overview
A common saying I've heard throughout my life is that history repeats itself, and the stock market is no exception. Some cycles are fairly frequent, while others are much rarer. Right now, we're approaching one that falls into the latter bucket, with a stock market that hasn't been this expensive in over 26 years.
There are various ways to measure how expensive the stock market is (based on the S&P 500 (SNPINDEX: ^GSPC)), but one go-to is the Shiller price-to-earnings (P/E) ratio, also known as the cyclically adjusted P/E ratio (CAPE ratio). At the time of writing, the CAPE ratio was 42.2, its highest level since the dot-com bubble when the ratio peaked at 44.2 in November 1999.
Details
Unfortunately, the dot-com bubble didn't end well, but what does that mean for the current state of the stock market? Well, let's take a look.
Source
Originally published at www.fool.com.
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