With the market soaring, it’s easier to notice how jittery some investors can be. This phenomenon explains the sharp selling of stocks sparked by coronavirus’ spread.
And while it is risky for your health, coronavirus is unlikely to impact the long-term growth of your investments.
The Arizona Republic reports:
The roughly 1.5% tumble on Jan. 27 was the steepest down day for U.S. stocks in almost half a year. It coincided with news reports that companies from Disney and Starbucks to Ford and Apple were closing stores, suspending business travel or otherwise slowing or halting operations in affected areas of Wuhan, center of the outbreak, and other Chinese cities. Carriers such as British Airways have curtailed flights. The market lost more ground Jan. 31 amid rising health warnings.
The China angle is significant given the country’s expanded trade ties and supply-chain connections with the U.S. and other Western nations. But while the headlines are worrisome, and societal health risks elevated, history suggests that the virus won’t have a lasting influence on the investment backdrop.
Health outbreaks have pushed down stock prices before, but such scares don’t exert a permanent impact. Long-term investors often are best served by not making rash moves, or any moves, based on these types of developments.
J. Reed Murphy, chief investment officer at Calamos Wealth Management in Naperville, Illinois, looked at the market’s reaction to 15 prior epidemics and pandemics dating to 1957, measured by performance of the Standard & Poor’s 500 index including dividends. The health-scare list included flus, fevers, a smallpox outbreak, plague, Ebola, cholera and other viruses.
Continue reading at the Arizona Republic.