Use valuation metrics like the P/E ratio with caution ⚠️

The short-term predictive power is unreliable at best 🤷🏻

The S&P 500’s forward P/E is below its 5-year and 10-year averages. (Source: FactSet)

Valuation metrics like the price-to-earnings (P/E) ratio help investors understand if a stock — or a basket of stocks like the S&P 500 — is cheap or expensive relative to historical averages.

According to FactSet, the forward P/E on the S&P 500 is sitting at 15.8. That’s…