By: Warren Ross
Time for a few words in light of the the recent market volatility related to coronavirus.
We all know that investing in the stock market means dealing with volatility. Fortunately in the last 12 years since the financial crisis, the direction has been mostly up. This being said, it’s been a while since we’ve had to deal with adverse circumstances, and it is here we find ourselves today. The purpose of this post is to address the current situation and to put it into context.
The recent news about the coronavirus has made people around the world concerned about the implications for the global economy. If there is one thing that the stock market doesn’t like, its uncertainty. In the past week, stock markets around the world have fallen in the 12% range, the most since the financial crisis in 2008.
Going forward, if you do some research on the matter, you will find some prognosticators predicting the worst, and others, like the head of the world health organization, encouraging global investors to calm down and examine the evidence, and to put things into context.
The following are some additional insights from some of the investment companies we deal with:
- Mackenzie Investments: Coronavirus: Macro impact: Short-run vs long-run effects
- Fidelity Investments: Portfolio managers monitoring market impact of coronavirus
- CI Investments: Coronavirus-FAQ 2020-02-28
As a financial advisor, I don’t have the expertise to advise my clients on the risks of the proliferation of this illness, but what I can do is advise my clients on how to manage their investments in a volatile market.
To begin, my advice is to take a moment to keep in mind some very old adages about investing:
- Uncertainty is a constant, and downturns happen frequently. But market setbacks have typically been followed by recoveries. (Focus on the big picture)
- Stay disciplined: Trying to time the market has proven challenging–and could cost you. (Don’t miss out)
- Plan for a variety of markets: An investing approach built with your goals and situation in mind may help you cope with short-term volatility. (Diversification = Less Risk)
In summary, no one likes when their investments go down in value even if its temporary. Going forward, it’s possible the markets may go down further. They may rebound sooner than we think as well. Whatever the case may be, I believe my clients are diversified sufficiently to whether the storm, and to achieve their long term objectives.
If you have questions about your investments, or their suitability, or if you feel that your objectives or risk tolerance has changed, feel free to contact me anytime.
Mortgage Broker/Mortgage Intelligence
Financial Security Advisor/ Warren Ross Financial Services Inc.
Investment Representative/Quadrus Investment Services