5 Reasons the Stock Market Is Historically Expensive
Despite a tumultuous past 11 months, investors probably have a lot to smile about. Following a 34% loss in the broad-based S&P 500 (SNPINDEX: ^GSPC) over just 33 calendar days in the first quarter of 2020, the market's benchmark index has been on a tear. It ended 2020 higher by 16%, which is nearly double its average annual return over the past 40 years, and it's pushed to multiple new highs in early 2021.
But what's currently unmistakable about equities is that they're pricey.
As of this past weekend, the S&P 500's Shiller price-to-earnings ratio was just shy of 35. The Shiller P/E ratio is based on average inflation-adjusted earnings from the previous 10 years. This reading of 35 is the second-highest we've seen during a sustained bull market uptrend over the past 150 years. It was topped only by the dot-com bubble, when the Shiller P/E for the S&P 500 surpassed 44.
Source Fool.com
