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!)