The good news is that this doesn’t necessarily mean a recession is imminent. While economists do believe slower growth could lead to greater volatility, 58% of those surveyed do not expect a recession to begin in the next year. <\/p>\n
Whatever the future holds, here’s what history suggests investors should do right now to prepare. <\/p>\n
The upside of a surging stock market is that investors reap the rewards as their stocks skyrocket in price. The drawback, however, is that the market is incredibly pricey right now, and some stocks are more likely to be overvalued<\/a>. <\/p>\n The S&P 500 Shiller CAPE Ratio measures the S&P 500’s 10-year inflation-adjusted earnings, providing a snapshot of the index’s overall valuation. Higher metrics suggest that the index is valued more richly, while a lower ratio implies it may be undervalued. <\/p>\n While this market indicator isn’t an exact science, it can be helpful to see how it’s changed over time. Its long-term average is around 17, and it reached a record high of around 44 just before the dot-com bubble burst. As of this writing, it’s just over 41. <\/p>\n Again, this doesn’t necessarily mean that a recession or market crash is looming. But it’s rare for the S&P 500 to be this richly valued, and overvalued stocks are much riskier buys right now. When a downturn eventually does hit, those stocks have the furthest to fall. <\/p>\n The best move investors can make right now <\/p>\n No matter when the next downturn begins, investing in quality stocks whose prices match their underlying fundamentals<\/a> is a historically proven way to weather periods of volatility. <\/p>\n Stock price alone doesn’t necessarily make for a strong investment. Some stocks are more hype than substance, and if you buy at the top, you could face steep losses if that investment faces a pullback. By focusing on stocks with fair valuations, you’ll be better positioned for long-term growth. <\/p>\n There are many factors that go into choosing an ideal stock. Financial metrics such as the price-to-earnings (P\/E) ratio and price-to-sales (P\/S) ratio are good places to start in determining valuation, but factors such as a competitive advantage and a sustainable business model are equally important for long-term growth. <\/p>\n Now more than ever, it’s crucial to choose your stocks wisely. While the market may be historically expensive, there are still plenty of undervalued stocks poised for significant long-term growth. By loading up on quality investments, you’ll be better prepared for whatever may be ahead for the market. <\/p>\n Don’t miss this second chance at a potentially lucrative opportunity <\/p>\n Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this. <\/p>\n On rare occasions, our expert team of analysts issues a “Double Down” stock<\/a> recommendation\u00a0for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves: <\/p>\n Nvidia:\u00a0if you invested $1,000 when we doubled down in 2009,\u00a0you’d have $511,405!* <\/p>\n Apple: if you invested $1,000 when we doubled down in 2008, you’d have $59,210!* <\/p>\n Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $410,833!* <\/p>\n Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join\u00a0Stock Advisor, and there may not be another chance like this anytime soon. <\/p>\n See the 3 stocks \u00bb<\/a> <\/p>\n *Stock Advisor returns as of July 6, 2026 <\/p>\n Katie Brockman<\/a> has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy<\/a>. <\/p>\n<\/a> Image source: Getty Images. History suggests investors should be careful right now <\/p>\n
<\/a> S&P 500 Shiller CAPE Ratio<\/a> data by YCharts<\/a> <\/p>\n