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The Economic Implications of Coronavirus
Mar 3rd, 2020
In recent weeks, news about the coronavirus has dominated headlines and has become even more prominent in the last week as the virus continues to spread. But there is something that has been spreading even quicker: fear. This includes fear about the economies that have been affected by the coronavirus.
The fact is that uncertainty breeds fear. We don't know how long the impact of the virus will last or how severely it will affect the global economy, but one thing that we can do is look at the outcome of similar events in history. The below table shows a few examples of recent epidemics and how markets reacted to them:
What all four of those examples have in common is that despite having a short-term correction, all of the impacted markets recovered in a relatively short period of time. We don't know the long-term market implications of the coronavirus, but as Mark Twain famously said, "History doesn't repeat itself but it often rhymes".
If you would like to do some further reading on the topic, I've included links to a couple articles that I found interesting:
Coronavirus Pandemic Won’t Have Long-Term Effects on the Stock Market
This article is interesting because David Graham is both an infectious diseases doctor and a retirement planner, which puts him in a unique position to comment on the economic outlook surrounding coronavirus. It provides an interesting mix of commentary on how to protect yourself from the virus both medically and financially.
12 Things That Won’t Help You During a Market Correction
The second article that I chose to include is from Ben Carlson, one of my favourite financial bloggers. In this post, he points out a number of common responses to market corrections and reminds us why they simply aren't helpful at all. It can be easy to react on emotion or on what we hear in the news, but often those reactions put us in a worse place than we would be if we simply rode out the downturn.
When we face uncertainty in the markets it understandably brings fear. I hope that these articles have helped to ease your concerns. If you would like to discuss anything from this email, please feel free to ask.
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John Sabourin - CFP, FLMI, BA, B. Comm, RRC
Life Insurance Advisor - Selectpath Benefits & Financial Inc.
Financial Advisor - Manulife Securities Investment Services Inc.
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john.sabourin@manulifesecurities.ca | www.johnsabourin.ca