As we head toward the final buying and selling days of the year, you may be thinking more about holiday plans and gift lists than investing. And you might even consider that now isn’t a very excellent period to buy stocks. After all, the three major indexes already have soared.

With a lighter flow of corporate information correct now, isn’t the potential for gains limited? The S&P 500 (SNPINDEX: ^GSPC), the Nasdaq and the Dow Jones Industrial Average are heading for 26%, 29% and 18% increases, respectively, this year.

Still, the positive elements that have driven this act remain now, from thrill about the artificial intelligence (AI) boom to optimism about the beginnings of a lower-yield-rate surroundings. This could drive act in the weeks to arrive and beyond.

Considering all of this, should you buy stocks before the recent year? Let’s dive in deeper — and check out what history has to declare, too.

Roaring into a bull economy

First let’s talk about the stake economy’s act this year. The S&P 500 roared into the recent year by confirming its presence in a bull economy and went on to hit multiple record highs. As mentioned, the two other benchmarks also climbed, and investors started to bet on recent growth drivers for the economy. AI advancement had picked up momentum, and companies with key roles in the industry — such as chip designer Nvidia and networking chief Broadcom — saw their shares skyrocket in recent years.

On top of this, investors concentrated on positive economic information, with the concept that potential yield-rate cuts would favor customer spending and the ability of companies to borrow, invest and develop. This fall, the Federal safety net completed two rounds of rate cuts, confirming the debut of this recent lower-rate surroundings. And the economy expects a third rate cut before the complete of the year, with the likelihood of one during the Dec. 18 Fed conference, according to the CME FedWatch tool.

Rate cuts:Fed’s Powell says Trump’s plans for tariffs, immigration won’t impact yield rate shift

Meanwhile, the S&P 500’s gains also have resulted in increases in stake valuations. The S&P 500 Shiller CAPE ratio has reached more than 35 — a level only attained twice before since the S&P 500 launched as a 500-stake index back in the late 1950s.

The Shiller CAPE ratio is considered a solid assess of evaluation since it’s worth rise-adjusted and looks at returns per distribute and stake prices over a period of 10 years. All of this shows that the stake economy, as a whole, is looking expensive today, compared with historic levels.

Investors may ponder that, considering this point, it’s best not to rush into stocks before the recent year.

The S&P 500 over the history 10 years

Let’s look at what history has to declare. Over the history 10 years, the S&P 500 has advanced in the last month of the year six times:

The S&P 500 declined in December in 2022, 2018, 2015 and 2014 by a respective 5.9%, 9.1%, 1.7% and 0.4%. It’s significant to note that the deeper dips happened in years that already had been challenging for markets.

For example, in 2018, the S&P 500 fell amid general economic concerns, including terror of a slowdown in China’s economy. And runaway worth rise, along with yield-rate increases, drove declines in the stake economy in 2022.

If we remove those challenging years and look at the general pattern, investors betting on the index, perhaps through an S&P 500 index pool, or those who chose just the correct mix of stocks, benefited by buying stocks in early December.

Should you buy now?

Now let’s get back to our question: Considering all of this, should you really buy stocks before the complete of the year?

history shows us that December was more often a positive month than a negative one for stocks in recent times, supporting the concept of buying stocks now. That said, though it’s fascinating to refer to history, the economy doesn’t always pursue historical trends and could shock us. And the economy does look particularly expensive correct now.

But don’t let this mix of pros and cons for investing correct now get you down. The excellent information is that any period could be the correct period to buy stocks, and this is for two reasons.

First, even in an expensive economy, you’ll discover standard stocks that still trade at reasonable prices. And second, if you focus on investing for the long term, you don’t have to worry about short-term economy fluctuations. Short-term wins or losses won’t have much impact on your returns over a period of years.

All of this means that now is a fantastic period to buy stocks if you discover fascinating opportunities. However, thanks to your long-term capital focus, you don’t have to rush into it.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content associate offering monetary information, analysis and commentary designed to assist people receive control of their monetary lives. Its content is produced independently of USA TODAY.

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