Broker Check

WNFG Coronavirus Market Update

February 25, 2020
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Coronavirus Market Update – We’ve been here before.

Yesterday, the S&P 500 lost 3.35% on new fears related to the Coronavirus.  So, what does that mean? I think any fears you may have will be put at ease by the time you are done reading this. 

First, let’s take a look at the S&P 500 short term reaction over the last 5 major virus outbreaks:

Virus

Date Range

S&P 500 % Change

SARS

Jan. 2003-Mar. 2003

-12.80%

Avian Influenza

Jan. 2004-Aug.2004

-6.90%

MERS

Sept. 2012-Nov.2012

-7.30%

Ebola

Dec. 2013-Feb. 2014

-5.80%

Zika

Nov. 2015 - Feb. 2016

-12.90%

 

 

 

(data from CNBC, y-charts, marketwatch)

Second, let’s take a look at the S&P 500 return 12 months after the dust settled on these viruses:

Virus

S&P 500 % Change (12 month)

SARS

20.76%

Avian Influenza

18.36%

MERS

17.96%

Ebola

10.44%

Zika

17.45%

 

(data from marketwatch, wall street journal)

Imagine if you had sold everything because of short term fear? You would have probably regretted it a short 12 months later.

Third, if you are a long term investor and contributing to your 401(k), 403(b), or other retirement plan, your bi weekly contributions to your retirement accounts just got even sweeter.  As a buyer of stocks, you want to buy during a market low. Market timing is impossible, but staying the course and remaining disciplined has shown to reward investors. 

Overnight, the Wall Street Journal reported that Moderna, a drugmaker in Massachusetts, delivered the first batch of a coronavirus vaccine to US government researchers for testing.  This vaccine development is the fastest response to a viral outbreak in history. 

There is always something that will result in short term volatility.  There will always be something to grab headlines.  This outbreak may cause some short term economic instability, but as a long term investor, you need to understand that none of this drives long term market returns, and staying the course is always the best idea. 

We will be keeping an eye on the developments of the Coronavirus, and if something material changes our opinion, we will be in touch with you.

 

 

 

Best,

 

Walsh & Nicholson Financial Group

 

 

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