Stock Market Bubble: Are Stocks Too Expensive Right Now?

Despite the COVID-19 pandemic and related shutdown, despite the shock to employment, despite the economic uncertainty globally, and despite a decade-long expansion, the stock market just keeps going up.

The Wall Street Journal recently reported that the P/E ratio for the S&P 500 based on the trailing 12 months of earnings is 25.6, while the P/E based on forecast future earnings would be at levels that were last seen in the year 2000. Remember, 2000 was followed by a three-year market slump.

The disproportionate nature of the market rally is even more concerning. Little more than 25% of stocks in the S&P 500 are actually up for the year. The bull run has been dependent on a small portion of stocks. Principally, tech has been the saving grace.

Source Fool.com