Our perception changed evolved last week when the coronavirus spread to northern Italy, South Korea, and Iran.
Driven by computer selling programs taking their cues from headlines, the hit to stocks originates amid theories the coronavirus will damage the U.S. and global economy.
Today, there are concerns disruptions to normal routines could also pressure demand for goods and services, delaying projected growth in corporate profits this year.
Perspective: Coronavirus and past epidemics
But, are investors overreacting? The flu infected about 40 million people in the U.S this season. There have been about 510,000 hospitalizations, and tragically, 18,000–46,000 deaths. Yet, our daily routine goes on uninterrupted.
In comparison, just 566 Americans have contracted the coronavirus as of today. Today, we’re being pelted by wall-to-wall media coverage of the coronavirus.
Fear spreads fast, but keep perspective
While we can critique the media and stock market reactions, what we know is the market sold off. Fear has spread faster than the virus. So far, the economy is on a solid footing, and the banking system is in much better shape than 2008.
We know market volatility is inevitable but has typically been short-lived. Stocks seem to take the stairs up and the elevator down. This bout of volatility will end, but calling a bottom is impossible. You and we know no one has a window on the future.
Once again, we emphasize your holistic financial plan incorporates your goals and is crafted on several factors, including your risk preferences and time horizon.
It is a roadmap to your financial goals. It incorporates inevitable market declines and keeps us from making rash decisions when markets turn volatile. When stocks surge ahead, and one may be tempted to take a more aggressive but riskier posture.
We recognized these are trying times, not simply from the vantage point of the investment community. No one likes uncertainty, especially as it relates to our health and the health of our loved ones.
Uncertainty drains our most precious resource: happiness. Turn off the news, get outside, and turn to what brings you peace. We are confident this too shall pass, and we will be better for it.
If you have any thoughts, questions, or concerns, feel free to reach out to me. That’s what I’m here for. My door is always open.