Market Valuation – Where Are We Now?

Lots of mayhem on Wall Street right now with the media focusing only on the coronavirus. I’ve had a couple people ask me about it, so I thought I would shoot out my thoughts today.

I think the coronavirus does represent a significant short-term financial risk while businesses and government work to control the impact of it on global corporate supply chains.

At the same time, I think Wall Street investors were already looking to pull back given the historically high PE (price/earnings) ratio that had developed. Notice that the current PE is still 28 – way above the historical PE of 17.

Fifteen months ago, there was also a market pullback as folks worried of a recession. That didn’t stick in the long run, but perhaps investors needed more of an acute trigger.

Our retirement savings are carefully packed away with a three year spending buffer of cash. We can hopefully out wait a substantial down market without any impact to our savings. Make sure when you plan out your retirement nest egg you do the same.

Have A Great Weekend (The markets are closed!)

2 thoughts on “Market Valuation – Where Are We Now?

  1. Amen, Chief! There are lots of reasons for media and markets to be manipulated. But not reasons to be whipsawed by them — as long as one has solid long terms plans, and a steady hand to steer towards one’s goals.

    Liked by 1 person

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