You may not like what I’m about to say, but the data doesn’t lie: Stock market crashes happen frequently, whether we want them to or not.
Since the beginning of 1950, the benchmark S&P 500 (SNPINDEX:^GSPC) has undergone 38 double-digit percentage declines. Put in another context, we’re talking about a crash or correction, on average, every 1.87 years. We’re already more than 16 months removed from the bear-market bottom hit on March 23, 2020, which fully suggests that a crash or correction may be brewing.
The likelihood of a crash or correction is growing
If you want more concrete evidence that trouble could be on the horizon, take a closer look at the S&P 500’s Shiller price-to-earnings (P/E) ratio. The Shiller P/E takes into account inflation-adjusted earnings over the previous 10 years. On August 2, the S&P 500’s Shiller P/E closed at 38.1, which is almost a…