When the AIDS epidemic broke out in June 1981, the 12 month change on the S&P 500 was -16.5%. When the pneumonic plague broke out in September 1994, the 12 month change on the S&P 500 was +26.3%. During the SARS epidemic which broke out in April 2003, the 12 month change on the S&P 500 was +20.76%.
When the Swine Flu broke out in April 2009 the following 12 months resulted with an S&P 500 return of +35.9%. When the Ebola virus broke out in March 2014 the following 12 months produced +10.44% on the S&P 500.
Over the last 50 years there have been many epidemics, and, over time, the market has traditionally kept marching on. Bear in mind, many of us have been wondering if some sort of market correction wasn’t already long overdue, so the market gyrations of late should not bring much insecurity to the educated investor.
Inspire Financial Planning’s mission is to educate and inspire people from all walks of life to become great investors. We believe one of the best ways to become a great investor is to study the past as well as to be hopeful for the future. Without doing a little of both it will be hard to keep your perspective when the seas get rough. And they will, occasionally, get very rough.
Recent Stock Market Returns
When studying January and February returns for the year, it looks like most equity (stock) total returns are -10%. This includes large caps, mid-caps, small caps, internationals, and emerging markets. During the same timeframe, most fixed income (bond) returns are +4%. This includes aggregate bonds, high quality corporates, short and long-term government, mortgage-backed, tips, and cash. If we throw all this into a soup with equally weighted ingredients, we will end up about -7% in the red. After an incredibly strong 2019 this should not be too hard to absorb given the circumstances.
We do not know what the future holds for the coronavirus and how this may specifically affect the stock market. But we do believe that a well-diversified global portfolio is one of the best ways to stay prepared for events just like this. Our prayers go out to all those that have lost loved ones across the globe, more prayers for the ones that are currently fighting this terrible virus, and a few more for those that are either researching cures or trying to prevent contagion.
Coronavirus: Educated Investor Perspective
To keep a healthy perspective, please enjoy some hopeful articles linked below regarding investment strategy. If you want to become a great investor, stay hopeful, stay diversified, work with a professional, and stay up-to-date with your reading as it pertains to this fascinating world, the global economy, and the global stock market.
INVESTMENT DATA SOURCES:
Dow Jones Market Data
AlphaStar Market Monitor, Dow Jones
Related Investment Articles/Blogs
https://inspirefp.net/portfolio-stress-test/
https://inspirefp.net/dave-ramsey-millennial-six-characteristics-millennials-rich/
https://inspirefp.net/preparing-market-downturn/
https://inspirefp.net/four-principles-successful-investor/
https://inspirefp.net/401k-efficacy-asset-allocation/
https://inspirefp.net/disagree-warren-buffett-argument-bonds/
About the Author
Jeff Headrick is an independent financial planner and wealth manager with Inspire Financial Planning. When Jeff was still in his teens his father died unexpectedly. While his father was a hard worker and a good provider, he did not have the best financial plan in place when he died.
This left his family at a tough financial crossroad. This personal experience, coupled with being inspired by Sir John Templeton, Warren Buffett, Dave Ramsey, and the laws of compound interest, prompted Jeff to enter the financial services industry in 1999. He has been helping people with their financial planning ever since.
Jeff lives in Wilmington, NC with his wife and two children. He spends most of his spare time just across the Intracoastal Waterway in Wrightsville Beach, enjoying the beauty of the NC Coast.
Charts and graphs contained herein should not serve as the sole determining factor for making investment decisions. All hypothetical scenarios are for illustrative purposes only. Investment Advisory Services offered through AlphaStar Capital Management, LLC a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results.
You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
These are the views of Inspire Financial Planning and not necessarily those of AlphaStar Capital Management, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.