3 Signs That the Stock Market May Be Too Expensive
For the last five months, the predictions that an overvalued stock market would soon correct itself have had investors on the edge of their seats. When the stock market is overvalued or "too expensive," stocks cost more than they're worth, which could lead investors like you to overpay for them. But the following three market indicators can help you better understand how to value the stock market and make sure you're buying stocks at the right price.
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Developed by economist Robert Shiller, the Shiller Price-to-Earnings ratio takes the annual prices of S&P 500 companies over the last 10 years, divides them by the earnings of those companies, and adjusts for inflation. Lower numbers indicate that the stock market is undervalued, while higher numbers suggest that it's overvalued.
Source Fool.com
