The S&P 500 (^GSPC +0.42%) is up by more than 10% over the last three months alone, as of this writing — its most successful quarter in years. But it’s also a historically expensive time to invest, and some metrics are sounding the alarm over the market’s valuation.
For example, the Buffett indicator — named for Warren Buffett after he used the metric to predict the dot-com bubble burst — now sits at a record high of 236%. In a 2001 interview with Fortune Magazine, Buffett himself noted that when this metric nears 200%, investors are “playing with fire.”
Now, this doesn’t necessarily mean that a bear market or recession is around the corner. But it’s more important than ever to ensure you’re investing in strong long-term stocks and funds. There’s one investment Buffett has strongly recommended for decades, and history proves he’s been right every single time.
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