SPECIAL UPDATE – 2/26/2020

Coronavirus triggers drop in S&P 500

 

U.S. stocks have fallen almost 8% from all-time highs over the last five trading sessions as the coronavirus has startled equity markets.  The global economy was already stuck in low gear prior to the outbreak, and the potential negative impact of the coronavirus on growth is reverberating through the global economy.  China, the world’s workshop, is essentially on “lockdown” in an effort to contain the virus, disrupting supply lines across the globe.  According to the CDC, the virus has spread to almost 40 countries, although cases outside of China remain relatively low.

While concerns over stunted economic growth are the primary culprit for recent stock declines, growing investor anxiety over of the spread of the virus adds a layer of complexity.  Investors generally don’t enjoy seeing their portfolios decline in value and the possibility of the coronavirus spreading throughout their own communities adds to the collective angst.

In times like this, it can be helpful to remember that history has been riddled with instances of human ailments over the centuries from cholera to SARS.  Per the chart below, the last twenty years has witnessed seven such ailments, including the current version of the coronavirus, none of which have permanently derailed stocks:

Coronavirus Update Graph

 

While the potential for a broader epidemic exists, the current impact of the coronavirus is a fraction of the annual flu.  According to the CDC, the 2017-2018 version of the flu spread to 45 million people and killed 61,000 people in the U.S. alone.

We continue to monitor the situation and are actively looking for opportunities to take advantage of market fluctuations.

In the event you would like to discuss the specifics of your portfolio, please don’t hesitate to reach out to us.  We welcome the opportunity to continue the conversation with you.