In your investing lifetime, you may only see a situation like the recent novel coronavirus (COVID-19) a few times. 

This is a circumstance where complete candor is necessary. The truth is that we can’t yet gauge the full economic impact, and by the time we can, the volatility may have passed. 

It’s important to remember that, in terms of market declines, the recent drop isn’t unprecedented. In fact, in the last six day-to-day declines of 3% or greater, the market rebounded higher a month later. 

Past performance is no indication of future returns, and it’s uncertain whether history is a good teacher in this instance.

Markets Have the Virus

Right now, markets are reacting to the news because the outcome is unknown. In a way, COVID-19 has “infected” markets all around the world. In times of market uncertainty, some traders believe the best approach is to sell. Fear is driving decisions. Nobody would blame you if this uncertainty gave you a bit of anxiety, as well.

Inflation fears, trade talks, political and international developments ... there’s a lot going on in the world right now. As we’ve seen over the years, events like these can influence stock prices in the short-term. When you hear that the markets are reacting to the latest news, remember: those reactions are a common occurrence, not necessarily a cause for alarm. 

You Don’t Buy Snow Tires in a Blizzard

By working together to develop an investment strategy that fits your risk tolerance, time horizon and goals, we have been preparing to weather turbulence. When a blizzard hits, the people who already own snow tires are usually happier than those venturing out into the cold, hoping they’re still in stock. In the same way, it’s generally best to make decisions during periods of low market volatility. We’re in the middle of the storm right now.

Here to Support You

This may be the time you need a trusted financial professional most. During most volatility, we advise you to “stay the course,” and that generally proves to be the best course of action. In times like this, however, it’s easy to question conventional wisdom.