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.

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Source Fool.com