After a strong start to the new year, the coronavirus, which originated in China, is causing high levels of investor concern. Despite action by Chinese officials, the coronavirus is spreading quickly. The Centers for Disease Control and Prevention (CDC) have now confirmed at least eleven cases in the U.S. The total number of confirmed cases has exceeded 17,000, with the vast majority still in China.
As a result, U.S. investor's fears caused the S&P 500 index to fall in excess of 3% in the eleven days following the confirmation of the first human-to-human transmission of the infection on January 20th. For some, the sentiment seems to be sell first, ask questions later. Stocks related to tourism and discretionary consumer spending have been among the hardest hit. Many airlines, including Delta, American, and United suspended flights to mainland China.
What Should Investors Do?
Stick to your plan. At GW & Wade, we typically take the long view and avoid reacting to day-to-day volatility. While we continue to stay attuned to the evolving health crisis, we are not making any tactical changes to our clients’ portfolios as a result. It may be helpful to recall that prior health epidemics, such as SARS and MERS, caused only short term impact in the financial markets. Overall, the same held true for the initial Brexit vote, the Greek debt crisis, and the U.S. debt ceiling stand-offs.
Our decades of experience have taught us that investors are generally rewarded for not making reactionary decisions during inevitable periodic downturns. We work with clients to develop well-conceived, diversified, and properly-monitored asset allocations that are tailored for their situation. We are confident that these allocations still make sense in light of current events. Of course, we will continue to monitor the situation for changing information. If you would like to discuss your situation in more detail, please do not hesitate to contact us with your questions or comments at any time.
The information provided above is the opinion of the author, general in nature and is not intended to represent specific investment or professional advice. No client or prospective client should assume that the above information serves as the receipt of, or a substitute for, personalized individual advice from GW & Wade, LLC, which can only be provided through a formal advisory relationship. Diversification and asset allocation do not ensure a profit or guarantee against loss. Past market performance is not a guarantee of future results.
Clients of the firm who have specific questions should contact their GW & Wade Counselor. All other inquiries, including a potential advisory relationship with GW & Wade, should be directed to:
Laurie Wexler Gerber, Director of Marketing
GW & Wade, LLC