S&P 500 hits record high price-to-book ratio raising concerns over market correction

The S&P 500 has reached a record high price-to-book (P/B) ratio of 5.30, surpassing previous peaks in 2021 and 2000. This increase raises concerns, as historically, such high valuations have preceded significant market corrections. Additionally, the Shiller price-to-earnings (P/E) ratio stands at 38.41, the highest during the current bull market. This ratio has also indicated potential downturns in the past, with previous instances leading to substantial losses for investors. Despite these alarming metrics, historical data shows that long-term investments in the S&P 500 have consistently yielded positive returns over 20-year periods. This suggests that while short-term risks may be present, long-term growth remains likely.