If There's a Stock Market Crash Ahead, History Highlights the Best Strategy for Investors
Yahoo Finance ·
I have bad news for anyone planning to buy stocks today: There's a stock market crash coming in your future. Whether the crash starts tomorrow, in 10 years, or sometime in between, though, is anyone's guess. That said, there are a few reasons to expect it could be sooner rather than later. For one, stock valuations are stretched. The cyclically adjusted P/E ratio for the S&P 500 ( ^GSPC -0.29% ) is near its all-time high, last seen at the height of the dot-com bubble. The Buffett indicator -- the ratio of the U.S. stock market capitalization to its GDP -- is at a record high as well. On top of that, the index is heavily concentrated in big tech stocks related to AI, so a single crack in the AI story could send the entire market tumbling. This isn't the first time we've seen a market like this, and it won't be the last. History tends to rhyme with itself. The smartest investors learn from history and apply the lessons to today, and that's exactly what you should do if there's another stock market crash ahead.
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