December 10, 2018 glacierinvest

It’s been an adventurous few weeks. Down quite a bit, back up quite a bit, and now back down quite a bit. Sentiment appears to be decisively negative whether it’s about rising rates, tariffs/trade wars or recessions. I have no idea which, if any, it is but I’m hearing increasing chatter about automated selling based on negative headlines. Talk about self-fulfilling prophecy. The media can fear-monger with dire headlines and the computers will sell stocks irrespective of the headlines’ validity. That makes investing quite challenging for those that read the news and watch the market on a regular basis. One can’t help but feel the need to do something when headlines are negative and the market is tanking.

Of course that’s a recipe for disaster and surely a deviation from any well-thought out financial plan. We wrote about the importance of sticking to your plan a couple of weeks ago. It’s times like these that test the conviction one has in his/her financial plan. At Glacier Investment, we help our clients design personalized plans to meet their needs. Next, we help them to implement those plans. Most importantly, we help them stick to those plans, providing them with the highest probability of achieving their objectives.

A Little Context

As we sit here today, a composite 12-month forward P/E ratio of roughly 3,000 U.S. stocks (replica of the Russell 3000) sits at an unweighted average of 16.8x and an unweighted median of 13.2x. That’s down 7% from the peak average multiple and over 24% from the peak median multiple. That’s quite the correction, driven entirely by sentiment.

Corrections are a normal part of any market cycle. While this correction could turn into something more, that shouldn’t be problem if you have a well-thought out plan in place and stick to it. If you need to put a plan in place or review your current plan you can find us here Glacier Investment Management.