News of the Coronavirus has gone from bad to worse over the last month. The stock market is down around 10% from the high based on fears the virus will slow economic growth and hurt corporate earnings. We think this scenario is likely but will prove temporary. There have been a number of global health scares over the years, and on average stocks have been higher six and twelve months later:
Considering the significant stock market gains last year without a correction (defined as a market decline greater than 10%), the recent sell-off is within the range of historical intra-year declines:
Typically, these intra-year declines don’t give much insight as to where the year will end up. For instance, in 2003 the SARS outbreak spooked the market sending it down -14% and then went on to close the year up 26%.
While the final impact of the virus, both from a human and economic standpoint, is serious and unknown, our advice is not to panic. In fact, moments of panic in the market have proved time and time again to be a good buying opportunities over the long term.
We will continue to monitor the situation and will take action if our economic indicators change direction. Please don’t hesitate to reach out with questions.
Mike Gallagher and the TPG Investment Committee
Advisory services offered through TPG Financial Advisors, LLC, an SEC-Registered Investment Advisor and a wholly owned subsidiary of The Partners Group, LTD.
