Updated: January 3, 2017
2016 is in the books, and the S&P 500 gained over 11% on the year. That’s great news if you’re already in the stock market … but it’s bad news if you’re looking to buy.
The market’s price-to-earnings (P/E) ratio is now 26.1, which is 17.6% higher than it was at the beginning of the year. In other words, if you buy stocks now, you’re paying nearly a fifth more for those companies’ earnings than you would have nearly 12 months ago.
Stocks Getting Expensive
Making matters worse is the fact that the S&P 500 has soared over 8% in the last two months alone—accounting for much of the year’s total gains.
“Trump Bump” Reboots Stocks