Is It Safe to Buy Stocks With the S&P 500 at a Record High? Warren Buffett's Advice Could Save Investors From Costly Mistakes
The S 500 (SNPINDEX: ^GSPC) advanced 31% over the past year as investors became more confident in a soft landing, a scenario in which the Federal Reserve successfully tames inflation without tipping the economy into a recession. The index currently sits within a percentage point of its record high, but upward momentum has stretched valuations across the stock market.
The S 500 currently trades at 20.9 times forward earnings, a slight premium to the five-year average of 19 times forward earnings, and a substantial premium to the 10-year average of 17.7 times forward earnings. Not surprisingly, some analysts on Wall Street think stocks are due for a correction. JPMorgan Chase and Morgan Stanley have set the S 500 with year-end targets of 4,200 and 4,500, respectively, implying a downside of 19% and 14% from its current level.
Those forecasts leave investors with a tough decision. Is it safe to buy stocks with the S 500 near its record high? Or is the stock market best avoided until valuations come down? Anyone looking for answers might want to take their cue from Warren Buffett.
Source Fool.com
JPMorgan Chase & Co. Aktie
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