What a Rare Market Pattern Signals for Investors
The S&P 500 is trading at an unusually high valuation, but the signal investors should watch may not be the one they expect.
Overview
The S&P 500 (SNPINDEX: ^GSPC) is trading at one of its highest valuations on record based on the Shiller cyclically adjusted price-to-earnings (CAPE) ratio, which stood at 41.7 on Sept. 10. Readings above 40 have occurred only once before, during the dot-com boom of 1999-2000.
Image source: Getty Images.
This may sound like a warning that a market crash is approaching. However, the CAPE ratio is more useful for estimating long-term return potential than for predicting when stocks will fall.
Details
Source
Originally published at www.fool.com.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Data may be delayed up to 15 minutes. Past performance is not indicative of future results. Consult a licensed financial advisor before making investment decisions.