The Only New Stock I’ve Bought This Year Is the Perfect Addition Amid a Historically Pricey Stock Market Earlier this month, the Dow Jones Industrial Average, S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite hit fresh all-time highs — and stock valuations nearly followed suit.
The second-priciest stock market in history has made it challenging to find a fundamentally attractive deal
While I’ve selectively purchased shares of a few existing holdings this year, there’s only one new stock I’ve added to my portfolio, and it’s ideally positioned to succeed amid a historically pricey stock market: York Water (NASDAQ: YORW). Historical headwinds are mounting for Wall Street Although “value” is subjective and varies from one investor to the next, the S&P 500’s Shiller Price-to-Earnings (P/E) Ratio cuts through this subjectivity. The Shiller P/E, also known as the Cyclically Adjusted P/E Ratio (CAPE Ratio), is based on average inflation-adjusted earnings over the trailing decade.
When back-tested to January 1871, the S&P 500’s Shiller P/E Ratio has averaged approximately 17.4. In early June, the CAPE Ratio for the current bull market peaked at 42.84, which is a stone’s throw away from the all-time high of 44.19 that was established in December 1999, just months before the dot-com bubble burst. History shows that Shiller P/E Ratios above 30 aren’t sustainable over extended periods.