Investment Update – Coronavirus
[Edited December 7, 2020 to remove copyrighted material]
The steep selloff that started Monday has continued and it looks like we will have 5 straight days of significant market declines, the worst since the 2008 financial crisis. The questions everyone is asking are: will this continue, and if it does, what should we do?
The answer to the first question is easy. No one knows. No one can know. There’s a real chance that the market will go down further though.
The second question is a little easier to answer. What we shouldn’t do is react to our emotions and make errors that end up costing us money in the long term.
There have been health epidemics in the past and all of them caused market turbulence. But the most important thing to look at is the upward trend in the market. Yes U.S. stock indices are down almost 10% over the past week, but they gained 181% in the past 10 years. Also, this isn’t the first shock or drawdown we’ve seen in the long bull market since 2008 either. As mentioned in our last post, there have been numerous shocks to the market in the past 10 years that happened during that 181% rise.
Looking Ahead
The bottom line is no one will benefit from selling their investments in a panic (see the graphic below).
It may be scary while you are in the middle of it, but history demonstrates (again and again) that global disease outbreaks have very little effect on the market in the medium to long term. The Coronavirus doesn’t impact our view of what the markets are going to do in the next five, 10, or 20 years down the road.
Our Advice
Our advice is to try to drown out the noise and avoid the investment section of the newspaper. As the old adage says, “This too shall pass.”
CFP, CIM, FCSI, CHS, RIS
Director, Wealth Planning Services | Caldwell Wealth & Estate Advisory Ltd.
Investment Advisor | Credential Securities
Along with helping people prepare for their financial futures through solid financial planning, Dan curates and manages the investment options for the firm.
Disclaimer
Material in Dan’s articles was prepared solely for informational purposes, does not constitute a recommendation, professional advice, an offer or an invitation by or on behalf of Caldwell Wealth & Estate Advisory to any person to buy or sell any security or adopt any investment approach, and is no indication of trading intent in any fund or account managed by Caldwell Wealth & Estate Advisory. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Diversification or asset allocation does not guarantee a profit or protect against the risk of loss in any market. Unless otherwise specified, all data is sourced from Caldwell Wealth & Estate Advisory. Past performance does not guarantee future results.
Mutual funds, other securities and securities-related financial planning services are offered through Aviso Wealth, a division of Aviso Financial Inc. The information contained in this report was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This report is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds and other securities.
0 Comments