As the S&P 500 and Nasdaq hit new highs, The Motley Fool says investors should invest regularly rather than time the market. In Schwab’s 20-year study, an investor contributing $2,000 once a year ended with $170,000, versus $186,000 for a perfect timer.
The article says the S&P 500’s Shiller CAPE ratio, which compares its valuation with inflation-adjusted earnings over the previous decade, reached 41 this month; its roughly 150-year average is 17.8. The ratio had exceeded 40 only once before, in late 1999 and early 2000, when it reached 44 before the dot-com bubble burst and the S&P 500 lost nearly half its value.
Other investors in Schwab’s comparison ended with $166,000 using monthly dollar-cost averaging and $151,000 by investing only on each year’s highest day.
