Assume that the P/E ratio of the S&P/TSX Composite Index is moving quickly above 22 times, and the associated dividend yield has fallen below 2 per cent. Investors attempting market timing should invest in:

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When the P/E ratio of a market index like the S&P/TSX Composite Index rises significantly (above 22 times in this case) and the dividend yield falls below 2%, it often indicates that the market may be overvalued or nearing a peak. In such scenarios, investing in defensive stocks is a common strategy to prepare for a potential market downturn or correction. Defensive stocks tend to be less volatile during market slides as they are in sectors that are less sensitive to economic cycles, such as utilities or consumer staples.

Assume That the P/E Ratio of the S&P/TSX Composite Index