It sure would be nice if our investments only went up in value. Unfortunately, events occasionally occur which drive our accounts down for a period of time due to matters unforeseen. Although most, if not all current indicators point to a strong and vibrant economy, we are once again faced with concerns over health issues.
Our markets have previously and successfully faced the impact of SARS, Bird Flu, Swine Flu, Ebola, Zika and now Coronavirus – let alone the seasonal flu. The concern of the Coronavirus spreading around the world certainly gets our attention. Then we add the media and political voices to the mix, and we have quite a scare. While it is difficult to quantify emotions, there is no shortage of data around economic reactions to previous health scares. The link below is an article written by Capital Group (home of American Funds) provides sound contextual and thoughtful examination of how the Coronavirus has already impacted some global economies, and what we may be able to expect in the near future.
The threat of Coronavirus has China and other governments’ health agencies on high alert. We are impressed with the rapid deployment of methods to contain and end the impact of this latest health concern. These containment efforts are required and will lead to some economic implications. China has responded to the disease by placing multiple cities on mandatory quarantine, including many businesses and schools being closed. These actions will create a short-term ripple effect that touches global trade, manufacturing, and consumption of goods.
We agree with Capital Group’s outlook. In the short-term, we will feel the impact of coronavirus in the global economy. However, the economic rebound may happen swiftly once the outbreak is contained. It is important to consider your individual investment strategy, and not make rash emotional decisions based on fear. For those invested in the stock market, a rebound can only be realized if you remain invested. Selling your investments prematurely or at a loss with the hope of timing the rebound can seem like an enticing strategy, but typically backfires.
Right now, the best minds in the world are working on stopping the spread of this disease. At the same time, we invest in businesses all around the world that are continuing to operate and be profitable. We have record-low unemployment and growing labor participation rates which ultimately drives our economy. For those that are actively investing and saving for the future, maintain your long-term focus. For those that are withdrawing from retirement accounts and are worried about the short-term volatility, remember that we always build personalized portfolios that are designed to help you achieve your goals while not exposing you to unnecessary amounts of investment risk.
We hope that all persons impacted by this disease will see a speedy recovery. We are optimistic that the efforts of health professionals worldwide will prevail, fear will fade, and the markets will recover.
If you would like to discuss your situation, please contact our office. In the meantime, we will continue to monitor the markets, our economy and our clients’ portfolios closely. More updates will be sent as warranted.