As major stock market indices near new all-time highs, some investors may be hesitant to buy stocks. The Nasdaq Composite has nearly doubled over the last five years, and the S&P 500 is up 73%. In the last 16 months, the Nasdaq has surged over 50%, and the S&P 500 is up 32%. While stock prices are outpacing earnings growth, it doesn’t necessarily mean it’s time to sell.
Microsoft (NASDAQ: MSFT) serves as a good example of a company worth buying despite its high stock price. Although its valuation has increased, the company’s profitability and shareholder rewards have also improved. This makes Microsoft a better investment now than it was five to 10 years ago.
When benchmark indices reach all-time highs, caution is natural. It’s important to ensure that stock prices are rising for the right reasons, such as earnings growth and a solid investment thesis. Being too cautious may cause investors to miss out on opportunities like the growth seen in megacap companies like Microsoft.
Overall, now is not the worst time in history to buy stocks, but it’s crucial to understand the companies you’re investing in and why you want to own them. Research and knowledge are key when making investment decisions.
The Motley Fool’s Stock Advisor newsletter, which has outperformed the market for two decades, recently highlighted Microsoft as one of the top 10 stocks to buy right now. Consider exploring these recommendations to make informed investment choices.
In conclusion, while stock prices are soaring, it’s essential to invest wisely and understand the reasons behind the market’s movements. The key is to focus on companies with strong fundamentals and growth potential to make sound investment decisions.