Midweek Notes! October 16, 2008Posted by shaferfinancial in Uncategorized.
Tags: bear market, real estate investing, stock market, wealth building plan
Jeff Brown over at Bawld Guy wrote a great post today on real estate based investing. Not only does he get it, he has been doing it for his clients for a long time.
Fundamental Analysis is critically important for investors to perform. Yet, it is often ignored for more sexy or emotional factors. Here is a question for all you mutual fund investors. What is the p/e ratio (price to 12 month trailing earnings) for the stocks in your mutual fund? After the 1st quarter of 2008 the P/E ratio for the S & P 500 was over 21. Historically, the average is around 16. It now stands at around 11-12. What does that tell us. That even if profits go down on average 25%, the price for stocks in general are a little on the low side. No wonder Warren is buying!
Expect to see much fluctuation in the stock market as emotions have taken hold and rational analysis is out the window. Typical for a bear market. Trading in this market is nuts.
I see no reasons to alter my wealth building plan. Fundamental analysis remains the same! Still have some strategies I want to add, but will wait until all the emotion has wrung out of the market.
Do you have a wealth building plan? If so, how is it holding up? If not, why not?