Market Volatility and the Coronavirus (2.28.2020)


Global stock prices tumbled this week as investors braced for an expected drop in consumer spending, business activity, and corporate earnings following the spread of the coronavirus, technically named COVID-19, from China to cities in Iran, Italy, and South Korea.  The sell-off in stocks is occurring at a time of great uncertainty regarding how many people will be impacted and what medical advances will be made to fight the virus.  The effort to control the spread of the coronavirus has resulted in disruptions to global economic activity.  Strict quarantines have been placed on several cities.  Similarly, travel restrictions and public concerns have reduced the amount of global spending.

Meanwhile, the US fixed income market has experienced price appreciation and falling yields, as investors seek a safe haven to ride out the stock market volatility.  The gains in fixed income have helped to mitigate the losses from global stocks, showing the benefits of asset class diversification within portfolios.

When it comes to viewing your own portfolio through this event, we encourage you to consider the current risks and uncertainty present in the market. While market volatility is not fun, a diversified portfolio is well positioned to minimize damage.  We discourage exiting the market completely or trying to time the bottom of the market and increase equity exposure.  As we have said in the past, we want to avoid making short-term decisions with long-term money.  Instead, consider your time horizon and the level of risk in your portfolio.  If you feel an adjustment is appropriate, we suggest waiting until the market has found a more solid footing.

We know that market downturns coupled with high amounts of uncertainty can be anxious times for investors.  Our team at Conrad Siegel is always available to answer any questions you might have.