Coronavirus Effect on Your Money
Well this past week has certainly been nothing short of a roller coaster for us investors. During the last week of February 2020, the S&P 500 lost 11.49% — only to jump by 4.6% this past Monday, March 1st.1 By all accounts, the drop was largely driven by ever-increasing fears about the potential effects of the coronavirus (COVID-19) and its ultimate impact on the global economy. Although many market observers contend that the market was overvalued and due for a drop anyway, the unpredictability, strength, and suddenness of this historic tumble was unnerving for even the most seasoned investors. If recent volatility is causing some of that unnerving anxiety or even has you considering cashing out of your stocks, it may be worthwhile to pause and put recent stock events into perspective, using history as a guide. (And after all, what we do know is God is in control).
A look back
Since the year 2000, the market's negative response to health crises has been relatively short-lived. As this table shows, approximately six months after early reports of a major outbreak, the S&P 500 bounced back by an average of 10.47%. After 12 months, it rebounded by an average of 17.17%. Although there are no guarantees the current situation will follow a similar pattern, it may be reassuring to know that over even longer periods of time, stocks typically regain their upward trajectory, helping long-term investors who hold steady to recoup their temporary losses, catch their breath, and go on to pursue their goals.
Source: Dow Jones Market Data, as cited on foxbusiness.com, January 27, 2020. Stocks are represented by the Standard & Poor's 500 price index. Returns reflect the change in price, but not the reinvestment of dividends. The S&P 500 is an unmanaged index that is generally considered to be representative of the U.S. stock market. Returns shown do not reflect taxes, fees, brokerage commissions, or other expenses typically associated with investing. The performance of an unmanaged index is not indicative of the performance of any particular investment. Individuals cannot invest directly in any index. Actual results will vary. *End of month during which early incidents of outbreak were reported. **H1N1 occurred during the financial crisis, when, as during other periods, many different factors influenced stock market performance. 1 Based on data reported in WSJ Market Data Center, February 28, 2020, and March 2, 2020. Performance reflects price change, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.
Content taken from or prepared by Broadridge Advisor Solutions Copyright 2020.