Wall Street Is Worried About a Market Crash. 75 Years of History Says Investors Should Be Watching Something Else.
Don't overthink inflation, interest rates, or valuations. If you're a long-term investor, here's what you should be focused on.
Overview
Investors aren't exactly short on reasons to worry.
The Shiller cyclically adjusted price-to-earnings (CAPE) ratio, which measures stock prices against 10-year inflation-adjusted earnings, and the Buffett indicator, the ratio of stock prices to GDP, show that the S&P 500 (SNPINDEX: ^GSPC) is historically expensive. Leadership has been extraordinarily concentrated in megacap tech stocks. Inflation is well above 3%. Long-term Treasury yields are at multidecade highs. And beneath the surface of the major indexes, market breadth has weakened considerably.
Details
Any one of those could sound like a reason to prepare for the next market crash. But decades of stock market history suggest investors may be obsessing over the wrong things.
Source
Originally published at www.fool.com.
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