The economic impact of the outbreak of a coronavirus strain has added new risks to global markets. Although each epidemic is unique, the typical pattern is: concern builds to a point where a sharp drop in confidence and/or activity hits the markets and there is a temporary decline.
These events are by definition, impossible to predict. Likewise, the future impact that the Coronavirus may or may not have on the economy and market is nearly impossible to forecast.
That said, we’ve seen epidemics before and we will likely see them again.
The MSCI shows a similar trend, with the 1 month performance often negative, but rolling to positive the further you move out in time:
In our view, it is too early to tell the true extent of the economic impact or when investor concern will peak, but as seen in the tables above, previous epidemics suggest a buying opportunity emerges.
The coronavirus is proving to be a hot topic, and rightly so. Our health is one of the most important things. So, what can we do about our financial health?
3 things for you to remember:
- Stick to the plan – Sticking to your plan and your asset mix that we have structured. It is for you, specific to your needs and objectives.
- Stay diligent – Knowing that if you are accumulating your savings, stay diligent and continue to add to your investments. If you are retired, remind yourself that your portfolio has been preparing for this. It is structured properly and your fund managers are also taking advantage of the opportunities that come with lower prices.
- Tune out the noise!
The key is to resist the urge to act irrationally and believe in your investment approach.
Our success is in staying the course.