The S&P 500 has reached a Shiller price-to-earnings ratio of 42, its highest level since the dotcom crash of the early 2000s, according to a Motley Fool analysis. The index is currently around 7,800, having recovered from an earlier dip below 6,400 amid Iran war fears. The last time the Shiller PE was this elevated, many top stocks crashed, with Microsoft, Apple, and Cisco all falling more than 50% between 2000 and 2002. The analysis notes that AI stocks are driving current valuations, similar to how internet stocks fueled the dotcom bubble, and suggests investors may want to consider shifting from high-priced stocks to more reasonably valued investments or dividend stocks.
