Written by Sam Kovacs
Introduction
Markets are getting expensive. For this reason, we proceed with extreme caution when purchasing tech stocks, especially if they seem overvalued. Tech usually does bad during recessions, and overvalued companies also get hurt. Being exposed to overvalued tech stocks at this stage of the cycle would be extremely imprudent. The Shiller PE ratio has historically been a good indicator of markets getting too hot. For the S&P 500 (SPY), its Shiller PE ratio is now above 30x, nearly twice as much as its historical median value of 15.74x.