{"id":7177,"date":"2013-11-20T10:36:21","date_gmt":"2013-11-20T18:36:21","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=7177"},"modified":"2016-12-21T07:28:18","modified_gmt":"2016-12-21T15:28:18","slug":"investing-everything-seems-expensive","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/","title":{"rendered":"Investing When Everything Seems Expensive"},"content":{"rendered":"

If you read the popular\u00a0investing\u00a0news sites, the “rah-rah” headlines can give you pause.\u00a0Investing<\/a>\u00a0when everything seems overpriced is a challenge.<\/p>\n

This is where experienced investors start reaching for data to make\u00a0investing\u00a0feel okay. A popular number for this purpose is the price-to-earnings (P\/E) ratio.<\/p>\n

Since\u00a0stocks<\/a>\u00a0trade at very different prices, one way to compare them apples-to-apples is to look at how much you pay for their earnings, the money the company generates. That’s the P\/E ratio.<\/p>\n

\"investing\"<\/a><\/p>\n

The P\/E for the S&P 500 Index at this writing is 19.71. Compare that number to the median of 14.51 and you might conclude that stocks are expensive, but not exorbitantly so.<\/p>\n

To be a little more sure, you could look at the\u00a0Shiller P\/E<\/a>\u00a0(named for Yale professor Robert Shiller, pictured), which averages a decade’s earnings rather than the trailing 12 months.<\/p>\n

That number is at 25.42 vs. a median of 15.9. Now stocks seem a bit more expensive, yes, but not anywhere near the 1999 high of 44.2 on the Shiller scale.<\/p>\n

(Remember, that year was the height of the dot-com bubble, when companies with essentially zero earnings were trading through the roof. The Shiller minimum is 4.78, set in December 1920.)<\/p>\n

Now that we’ve informed ourselves, remember what “a little bit of knowledge” really does for us.\u00a0Information is soothing in its own way, but it’s hardly a substitute for\u00a0prudent retirement investing<\/a>.<\/p>\n

There are hundreds of data points you might consider in making (or not making) an investment. If you wanted a reason to take action, you will not lack for one.<\/p>\n

Instead, consider the simple basketball paradigm: You miss 100% of shots you don’t take.<\/p>\n

Put in\u00a0investing\u00a0terms, one should not time the market but spend time in the market. Every day you sit in cash its value erodes, steadily, due to\u00a0inflation<\/a>. Time is money, as usual.<\/p>\n

Investing\u00a0simply<\/h2>\n

That’s not to say “go buy stocks.” Far from it. But do buy investments. Prudent investors stay invested, even when markets seem to be peaking, by holding a balanced portfolio that includes stocks, bonds,\u00a0real estate<\/a>\u00a0and commodities.<\/p>\n

It might turn out to have been a “pricey” moment to get in. But unless your time horizon is less than a year, the cost and risk of “waiting it out” are enormous in comparison.<\/p>\n

A year passes, then two. Market rise and fall but never convincingly “bottom” in your mind. So you stay out and wait for the right moment to get in cheaply. And it never comes.<\/p>\n

Meanwhile, a\u00a0balanced portfolio<\/a>\u00a0would see gains now, collect dividends and interest payments between, and sell off incrementally as it mattered, by rebalancing. Rather than waiting for the right moment, it’s always the right moment.<\/p>\n","protected":false},"excerpt":{"rendered":"

If you read the popular\u00a0investing\u00a0news sites, the “rah-rah” headlines can give you pause.\u00a0Investing\u00a0when everything seems overpriced is a challenge. This is where experienced investors start reaching for data to make\u00a0investing\u00a0feel … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":7179,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[47],"tags":[62,42,43,37],"yoast_head":"\nInvesting When Everything Seems Expensive | MarketRiders<\/title>\n<meta name=\"description\" content=\"If you read the popular investing news sites, the "rah-rah" headlines can give you pause. Investing when everything seems overpriced is a challenge.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Investing When Everything Seems Expensive | MarketRiders\" \/>\n<meta name=\"twitter:description\" content=\"If you read the popular investing news sites, the "rah-rah" headlines can give you pause. Investing when everything seems overpriced is a challenge.\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/www.marketriders.com\/investing\/wp-content\/uploads\/2013\/11\/512px-Robert_Shiller_-_World_Economic_Forum_Annual_Meeting_2012.jpg\" \/>\n<meta name=\"twitter:creator\" content=\"@marketriders\" \/>\n<meta name=\"twitter:site\" content=\"@marketriders\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"MarketRiders\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/\",\"url\":\"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/\",\"name\":\"Investing When Everything Seems Expensive | MarketRiders\",\"isPartOf\":{\"@id\":\"https:\/\/www.marketriders.com\/investing\/#website\"},\"datePublished\":\"2013-11-20T18:36:21+00:00\",\"dateModified\":\"2016-12-21T15:28:18+00:00\",\"author\":{\"@id\":\"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c\"},\"description\":\"If you read the popular investing news sites, the \\\"rah-rah\\\" headlines can give you pause. Investing when everything seems overpriced is a challenge.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.marketriders.com\/investing\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Investing When Everything Seems Expensive\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/#website\",\"url\":\"https:\/\/www.marketriders.com\/investing\/\",\"name\":\"MarketRiders.com\",\"description\":\"How To Become A Better Investor\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.marketriders.com\/investing\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c\",\"name\":\"MarketRiders\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g\",\"caption\":\"MarketRiders\"},\"sameAs\":[\"https:\/\/www.marketriders.com\"],\"url\":\"https:\/\/www.marketriders.com\/investing\/author\/support\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Investing When Everything Seems Expensive | MarketRiders","description":"If you read the popular investing news sites, the \"rah-rah\" headlines can give you pause. Investing when everything seems overpriced is a challenge.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/","twitter_card":"summary_large_image","twitter_title":"Investing When Everything Seems Expensive | MarketRiders","twitter_description":"If you read the popular investing news sites, the \"rah-rah\" headlines can give you pause. Investing when everything seems overpriced is a challenge.","twitter_image":"https:\/\/www.marketriders.com\/investing\/wp-content\/uploads\/2013\/11\/512px-Robert_Shiller_-_World_Economic_Forum_Annual_Meeting_2012.jpg","twitter_creator":"@marketriders","twitter_site":"@marketriders","twitter_misc":{"Written by":"MarketRiders","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/","url":"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/","name":"Investing When Everything Seems Expensive | MarketRiders","isPartOf":{"@id":"https:\/\/www.marketriders.com\/investing\/#website"},"datePublished":"2013-11-20T18:36:21+00:00","dateModified":"2016-12-21T15:28:18+00:00","author":{"@id":"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c"},"description":"If you read the popular investing news sites, the \"rah-rah\" headlines can give you pause. Investing when everything seems overpriced is a challenge.","breadcrumb":{"@id":"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.marketriders.com\/investing\/investing-everything-seems-expensive\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.marketriders.com\/investing\/"},{"@type":"ListItem","position":2,"name":"Investing When Everything Seems Expensive"}]},{"@type":"WebSite","@id":"https:\/\/www.marketriders.com\/investing\/#website","url":"https:\/\/www.marketriders.com\/investing\/","name":"MarketRiders.com","description":"How To Become A Better Investor","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.marketriders.com\/investing\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c","name":"MarketRiders","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g","caption":"MarketRiders"},"sameAs":["https:\/\/www.marketriders.com"],"url":"https:\/\/www.marketriders.com\/investing\/author\/support\/"}]}},"_links":{"self":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts\/7177"}],"collection":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/comments?post=7177"}],"version-history":[{"count":3,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts\/7177\/revisions"}],"predecessor-version":[{"id":7181,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts\/7177\/revisions\/7181"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/media\/7179"}],"wp:attachment":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/media?parent=7177"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/categories?post=7177"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/tags?post=7177"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}