Headlines are quickly changing and it is easy to get caught up in the moment as widespread reaction to the coronavirus have caused market disruptions and panic selling. Sometimes the madness of crowds sends prices to irrational highs as well as irrational lows. In the middle of calamity, it seems like troubles will never abate. Markets will typically over shoot to the downside during these types of events when establishing a bottom.
The latest news includes a U.S. travel ban on Europe for 30 days, the WHO classification of the corona virus as a pandemic, and the suspension of many significant events, with the latest including the NBA season.
The urge to do something in times of crisis can be daunting. If you are currently fully invested, and have a long investment time horizon, our advice is to stay there. Even during the Great Financial Crisis, once the market bottomed out it recovered over 50% of its losses within six months and 70% within a year1. It is best to exercise patience to fully think through the long-term implications of your actions. The uncertainties of the world can cause impulse decisions like liquidating at the worst possible time. In the end, investors who endure market declines, and stay invested, see positive growth after the markets stabilize. Investors who get out rarely get back in on time since timing the market is incredibly difficult.
In the meantime, we will continue to monitor the situation closely. Please give us a call if you would like to review your short-term liquidity needs and confirm that your longer-term investment strategy remains consistent with your goals.
Jonathan, Greg, Matt and Andrew
- Source: Morningstar.
Past performance is no guarantee of future results. International investing involves special risks, including, but not limited to, the possibility of substantial volatility due to currency fluctuation and political uncertainties. GL348c 03/20