S&P 500 – A widely watched valuation measure for the S&P 500 is near levels last seen just before the 2020 crash, flashing at 32 times earnings. The warning is stark for investors worried about a portfolio drop—but the long-term case for staying invested and using dolla
On a day when investors are watching every wiggle in the market, one number has started doing the talking.
The S&P 500 is currently trading at 32 times earnings. It’s the highest level since just before the 2020 pandemic-era crash. Before 2020, the only times the market traded above 30 times earnings were just before the financial crisis and the dot-com bubble burst.
To investors focused on the short term, that history doesn’t read like a comfort blanket. It reads like a warning—because it puts the broad market in “dangerous territory” according to the comparison being drawn across prior selloffs.
There’s a reason this particular measure gets so much attention. The price-to-earnings ratio for the entire S&P 500 is one of the most popular ways investors gauge how expensive the market has become. The logic is simple: it gives a snapshot of how high or low U.S. stocks are being priced, and then compares that picture to the past.
The scale is also hard to ignore. One ETF tracking the index—the State Street SPDR S&P 500 ETF Trust—has nearly $800 billion in assets under management.
And even as valuation signals flash, the market’s long-term rhythm is still pulling the conversation in a different direction.
The argument for staying the course is anchored in history and timing discipline. Even if someone had invested at prior bubble peaks. the piece emphasizes that you still wouldn’t have produced an impressive return over the long run—an illustration of how holding through cycles tends to matter more than predicting them.
One specific approach is offered as a practical way to reduce the risk of being paralyzed by valuation alarms: dollar-cost averaging. The method is laid out plainly—invest a regular amount on a schedule. For example, the article suggests putting $250 automatically into a broad stock market index fund each month. When prices are high, that fixed amount buys fewer shares. When prices fall, it buys more shares. Over time, the goal is to keep investing across market cycles without needing to time short-term corrections.
That long-term stance doesn’t erase the concern; it just changes what investors are asked to do with it.
Still, the warning remains on the table—because if earnings multiples are sitting at levels previously seen right before major downturns, the anxiety won’t disappear for anyone watching their portfolio in the weeks and months ahead.
Before any purchase decisions. the article also points readers toward a separate stock-selection framework: the Motley Fool Stock Advisor analyst team identified 10 best stocks for investors to buy now. and S&P 500 Index wasn’t one of them. It cites two examples from the Stock Advisor history: Netflix appearing on the list on December 17. 2004. and Nvidia making the list on April 15. 2005. The article says that if you had invested $1. 000 at the time of the Netflix recommendation. you would have had $418. 761*. and if you had invested $1. 000 at the time of the Nvidia recommendation. you would have had $1. 195. 804*.
It also includes the broader claim that Stock Advisor’s total average return is 918%, compared to 208% for the S&P 500, with returns as of July 5, 2026.
The report ends with standard disclosures: Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned, and it points to a disclosure policy.
For readers trying to interpret today’s flashing valuation signal, the immediate choice is stark: either treat it as a reason to worry about where the market may be headed next, or treat it as a reminder to focus on what they can control—how steadily they invest, and how long they stay invested.
S&P 500 price-to-earnings ratio stock market warning valuation dollar-cost averaging long-term investing ETF State Street SPDR S&P 500 ETF Trust
32x earnings sounds like a crash is basically guaranteed.
So are they saying the S&P 500 is “dangerous territory” again? I feel like every year it’s the same story right before something happens. Also how is this different from 2020 when everyone panicked?
Wait if it’s near 2020 levels doesn’t that mean the market already knows the future? Like they keep comparing it to past crashes but then say “stay invested” which is kinda confusing. My cousin said it’s because of an ETF with $800B, but idk. The earnings thing just sounds made up to scare people.
I read the headline and thought, “great, it’s 32x, so we’re cooked.” But then the article is like, don’t worry, long-term rhythm blah blah. Isn’t the whole point of PE ratio that it tells you it’s overpriced? Not saying they’re wrong, just seems like flip-flopping—either it’s a warning or it’s not.