Dow Jones Faces Stock Market Crash Risk as P/E Ratio Hits Historic High
Written by Emily J. Thompson, Senior Investment Analyst
Source: Fool
- P/E Ratio Warning: As of December 19, the S&P 500's Shiller P/E ratio reached 40.15, marking the second-highest level in 155 years, with historical data indicating that such levels typically precede declines of 20% to 89% in stock values.
- Buffett Indicator Surge: On December 10, the market-cap-to-GDP ratio hit 226.26%, representing a 166% premium over the 55-year average, suggesting overvaluation, as history shows that such highs often lead to double-digit declines in major stock indexes.
- Bull and Bear Market Cycles: Research indicates that the average bull market for the S&P 500 lasts 1,011 days, while bear markets average only 286 days, highlighting the importance for investors to capitalize on bull market opportunities despite potential future corrections.
- Investor Sentiment: While market corrections and crashes are normal occurrences, history suggests that these events often present excellent buying opportunities for long-term investors, encouraging a perspective of optimism amidst potential downturns.
BRK.A
$747000+Infinity%1D
Analyst Views on BRK.A
Wall Street analysts forecast BRK.A stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for BRK.A is USD with a low forecast of USD and a high forecast of USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
0 Analyst Rating
0 Buy
0 Hold
0 Sell
Current: 751245.040
Low
Averages
High
Current: 751245.040
Low
Averages
High
About BRK.A
Berkshire Hathaway Inc. and its subsidiaries are engaged in diverse business activities, including insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing, services and retailing. Its segments include Insurance, Burlington Northern Santa Fe (BNSF), Berkshire Hathaway Energy (BHE), Pilot Travel Centers (Pilot), Manufacturing, McLane Company (McLane), and Service and retailing. The Insurance segment includes GEICO, Berkshire Hathaway Primary Group, and Berkshire Hathaway Reinsurance Group. The BNSF segment includes the operation of railroad systems in North America. BHE segment offers regulated electric and gas utilities and real estate brokerage activities. Manufacturing segment manufacturers various products, such as industrial, consumer and building products. The McLane segment is engaged in wholesale distribution of groceries and non-food items. The Pilot segment is an operator of travel centers in North America and a marketer of wholesale fuel.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
