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The stock market has been on a tear in recent years, with major indexes reaching new all-time highs on a regular basis. However, some experts are warning that the market may be overvalued, and that investors should be cautious.
One of the main indicators of an overvalued market is a high price-to-earnings (P/E) ratio. This ratio compares a company’s stock price to its earnings per share, and a high ratio can indicate that a stock is overpriced. The S&P 500, which is one of the most widely-used measures of the overall stock market, currently has a P/E ratio of around 25, which is higher than the historical average of around 15. This suggests that the market as a whole may be overvalued.
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