Last month, I ran through a set of figures that cover a huge concern for retirees.
It’s vitally important information that affects nearly every dollar you have invested… yet most of what you hear about this idea is “bunk.”
I’m talking about the concern that the U.S. economy is “running off the rails”… that we are in a recession… or worse, a depression.
The figures I presented showed that our economy was growing slowly, without inviting a sharp increase in inflation. Today, nothing much has changed… No surprises, just steady progress. It’s the sort of environment that leads to gains in your stock portfolio.
But how much money should you have in stocks? And after their big rise (up 14% so far this year), are they too expensive to buy?
Below is the chart that provides our answer. It displays the historical price-to-earnings (P/E) ratio of the S&P 500. The P/E ratio is one of the time-tested ways to gauge stock market valuations. You’ll note that the S&P 500’s current P/E of around 16 is near its historical average of 16-17 times.