Shiller P/E Ratio Flashing Warning Signs for Stocks in 2024
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The Shiller P/E ratio, a widely followed stock valuation metric, is currently over 30 - a level that has preceded major market crashes in the past.
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All 5 previous times the Shiller P/E was over 30 during a bull market, it preceded a bear market where stocks fell over 20%.
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This suggests a stock market crash may be imminent in 2024, though valuations can stay extended for a while before crashing.
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However, historically stocks always recover from crashes and reach new highs, making crashes long-term buying opportunities.
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Analysis of 20-year S&P 500 returns shows the market always rises over long periods, so long-term optimistic investors can weather any storm.