Up 19% in 2023, Is It Safe to Invest in the Stock Market Right Now?
The stock market has been roaring since March. In fact, the S&P 500 (SNPINDEX: ^GSPC) is up a whopping 19% from its March low, and higher to the tune of 30% since it hit a cyclical bottom in October.
A funny thing happened while stocks were rallying over the course of the past few months, though: They became surprisingly expensive. Although their collective valuation isn't outrageous, given the scope of the recent run-up paired with the S&P 500's resulting price-to-earnings (P/E) ratio, it wouldn't be a crazy choice for investors to take a step back here and wait for things to cool off.
If you're looking for a number, here it is: The S&P 500 is now priced at 22.4 times its earnings for the past four reported quarters (ending with Q2), and is priced at 20.1 times its expected profits for the next four quarters (starting with Q3 of this year). Both are relatively rich valuations, suggesting there's not a whole lot of upside left in store for the near term compared to the growing risk of a correction.
Source Fool.com
