Transitions in the economy always produce unease in the stock market. The sudden and dramatic reversal in markets during the fourth quarter of 2018 is a familiar tune heard many times before.
Stock prices and valuations are better today than they were three months ago. The S&P 500 is selling at approximately 14 times forward earnings, which is about 11% below the S&P 500’s 25-year average according to JP Morgan. Investors putting money in stocks today can buy at more attractive prices than they could just three months ago.
Although the turbulent market has caused many investors to avert their eyes from the wild daily fluctuations in stock prices, we continue to seek out and buy attractively valued companies’ shares that are sold indiscriminately by panicked sellers. Our valuation-based approach focuses on the strength of a company’s cash flows, balance sheets, and the prospect of future growth.