How Long Can This Market Stay Overvalued?

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How Long Can This Market Stay Overvalued?

by Wochit 0:45 mins

How Long Can This Market Stay Overvalued?

by Wochit 0:45 mins

How Long Can This Market Stay Overvalued? The Dow Jones Industrial Average is at another record high. As stock prices soar higher, their price/earnings ratios increase, making the stocks more "expensive." The obvious drawback to buying stocks in an expensive market is that there is a higher probability of larger losses in the event of a pullback, and long-term returns can be muted. Many commentators are currently focusing more attention on Yale Professor Robert Shiller's "Cyclically-Adjusted Price/Earnings Ratio" or CAPE, rather than the trailing twelve-month P/E ratio, which is currently 19.6.

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