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Recent Market Volatility and the Coronavirus

The coronavirus COVID-19 continues to spread and many people are apprehensive about possible disruptions to consumer spending, supply chains, and manufacturing. Unexpected events, such as this health crisis, can lead to market volatility and it may take some time for markets to fully digest. Sudden and significant market drops can be very unsettling to anyone with an investment portfolio.

While most significant health events have some short-term impact on equity markets, historically they’ve had very little effect over periods of six months or longer. There have been a number of viruses that have gained global attention, starting with SARS in 2003, followed by the Avian flu in 2006, Swine flu in 2009, MERS (which is a coronavirus) in 2013, Ebola in 2014, Zika in 2016, and now COVID-19. The chart below illustrates the timing of these outbreaks and the performance of global equity markets.

 

A chart showing that global equity markets have powered through past viral outbreaks, from 2001 to 2019, including outbreaks from SARS, Avian flu, Swine flu, MERS coronavirus, Ebola, Zika, and now the Wuhan coronavirus (COVID-19)

 

At this point, nobody knows how many people will contract this coronavirus, how long it will last, or what the financial impact will be. We do know that the situation could change very quickly, and that markets will react just as quickly. No one can time the market, but we will take advantage of movements in the market by rebalancing your portfolio using a disciplined and unemotional approach that is tailored to your situation.

Market volatility is never fun, but it is a normal part of investing. While we know headlines can be distracting, we’re here to help keep your focus on your long-term plan. If you have questions about your investment strategy, or there have been changes to your personal situation, please contact your RCG advisor.

The MSCI ACWI captures large and mid-cap representation across 23 Developed Markets (DM) and 26 Emerging Markets (EM) countries.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Indices are not available for direct investment; therefore, atheir performance does not reflect the expenses associated with the management of an actual portfolio. The index returns above assume reinvestment of all distributions. This information is for educational purposes only and should not be considered investment advice or an offer of any security for sale.