Over the last week we have been carefully monitoring the impact of the Coronavirus as stock markets went into turmoil around the globe. Markets have reacted this way due to the uncertainty of the impact of Coronavirus and its effects on supply chains restricting the growth potential of companies, around the world. It is completely normal to worry at times like this, as human nature tends to be risk averse. History tells us that emotion led selling and crystallising losses can mean that you miss the right time to re-invest later. Markets will fall, but markets will recover. It’s time in the markets rather than timing the markets that will lead to the healthiest return over time.
The graph below shows the effect of previous epidemics on the stock markets around the world. You can see the 1, 3 and 6 month performance in relation to each outbreak. Epidemics aren’t new and markets have recovered, historically.
What should I do now?
In short, as we are investing for the longer term, we will make no knee jerk reactions to the events of the last week. It is likely that the coronavirus will continue to have an impact on the markets for a while and we will continue to monitor the situation and keep you updated. It was good to see the Dow Jones (US Stock Market) recovered over 5% on Monday 2nd March.
The value of your investments can fall in value as well as rise.