In response to the market concerns this week around the coronavirus, there is a lot of advice out there. The overriding sentiment is: don’t over- react.
Consider this:
The market as of this writing is at the same level as early November 2019. The CDC Update information is found at (https://www.cdc.gov/coronavirus/2019-ncov/summary.html), the site goes into detail about the virus, including the following description: Coronaviruses are a large family of viruses that are common in many different species of animals, including camels, cattle, cats, and bats. Rarely, animal coronaviruses can infect people and then spread between people such as with MERS-CoV, SARS-CoV, and now with this new virus (named SARS-CoV-2).
Earlier this week, we sent an email to our subscribers that included a table of past outbreaks and the effect they had on the markets.
The CDC goes on to say: “The potential public health threat posed by COVID-19 is high, both globally and to the United States.
But individual risk is dependent on exposure.
- For the general American public, who are unlikely to be exposed to this virus at this time, the immediate health risk from COVID-19 is considered low.
- Under current circumstances, certain people will have an increased risk of infection, for example healthcare workers caring for patients with COVID-19 and other close contacts of persons with COVID-19. CDC has developed guidance to help in the risk assessment and management of people with potential exposures to COVID-19.
However, it’s important to note that current global circumstances suggest it is likely that this virus will cause a pandemic. In that case, the risk assessment would be different.”
They go on to say that if you’re sick, take similar precautions that you would take with the flu, see https://www.cdc.gov/coronavirus/2019-ncov/about/steps-when-sick.html for more information.
In another new story, it was announced that a vaccine may not be available for over a year due to the process of small sample testing and then larger scale testing, treatment should be available much sooner.
The New York Times published this interactive map: https://www.nytimes.com/interactive/2020/world/coronavirus-maps.html
It is a good overall perspective of where this virus is today.
A senior writer for Yahoo Finance published an article today addressing the question of over-reaction of the markets. The general feeling is that the markets are over-reacting: https://finance.yahoo.com/news/is-the-stock-market-overreacting-to-coronavirus-172222574.html.
In another article, several steps were recommended that included:
- Maintain a long-term focus if your timeframe matches
- Continue to invest using dollar cost averaging
- Reconsider your risk, matching it to your goals
At TFS Advisors, we believe in having a diversified portfolio. Clients that are taking income from the portfolio have considerable assets in more stable funds that invest in High-Quality Short-Term bonds and cash that is often enough to fund several years of income needs. This allows the stocks to recover if (when) there is a shock.
Bottom line, there will be shocks to the markets; there will be recessions. Through the planning work we do, we are always seeking to match your portfolio and risk allocation to meet your income needs and other goals as stated in the plan. Then, we review your strategy on a regular basis with an emphasis placed on attempting to give you a high probability of success to help you meet your goals.
We’ll keep in touch, as always.
