Update – Market Volatility and the Coronavirus (3.10.2020)
The spread of the coronavirus, technically named 2019-nCoV, continues to dominate the headlines and the financial markets. The initial outbreak in China appears to be slowing and the concern has shifted to the increase in the number of cases around the rest of the world. Within the United States, there were over 560 cases of the virus as of the morning of March 9th in over 30 states. The conversation has shifted from if the virus will spread to how much it will spread and the steps that should be taken to combat it. Some companies have begun to increase opportunities to work remotely and select schools have been suspending classes to allow for cleaning or monitoring of individuals who were exposed to the virus. The decrease in consumer activity and the potential for continued disruption in the global economy continues to concern the financial markets. The week of March 2nd saw extreme swings in the markets as sentiment shifted. Monday saw a rally, Tuesday a selloff, Wednesday had gains, and Thursday/Friday saw decreases. Markets opened sharply lower on Monday, March 9th on the combination of virus concerns and the start of an oil price war between Russia and Saudi Arabia. Markets paused trading for 15 minutes due to the size of the initial drop at market open. The yields on longer-term Treasuries have dropped to all-time lows during this volatile time in the equity markets.
When it comes to viewing your own investments through this event, we encourage you to consider the risks present in the market, but avoid making short-term decisions with long-term money. We would discourage the ideas of exiting the market completely or trying to time the bottom of the market and increase equity exposure. Instead, consider your time horizon, the risk in the market (short-term and long-term), and make the appropriate adjustments to your investments.