Coronavirus, Stock Market and Economy

by Dr. Ken Curtis, DC, DIBCN

If your stock portfolio has taken a beating in the past couple weeks, the added mental stress is just adding insult to injury.  This selloff has been driven by fear.  Hans Selye and others proved that fear and stress are known contributors to sickness and disease. Remember the old adage that “Health is Wealth” so focus on the flower and not the weed. 

History has shown that the stock market has proven very resilient to epidemics and viral outbreaks. Over the last 40 years there have been 12 major epidemics and while many triggered initial declines, the S&P 500 was higher 92% of the time 6 months later.  Most recently, following the Zika outbreak in late 2015 the market fell -12.9%, but was 12% higher 6 months later and 17.5% higher 12 months later. According to William Oliver at Wells Fargo Wealth Management, “We don’t think this is the start of a prolonged correction… we believe we will reach “peak fear” over the coming weeks and then as fear fades the market will resume trend higher”.

Yes the virus has disrupted travel and global supply chains, but companies have endured financial meltdowns, wars, natural and other disasters. Economists are still predicting a swift U.S. recovery from the downturn caused by the virus. “Coronavirus is not going to sink the U.S. economy” says Larry Kudlow, director of the White House National Economic Council. Although it may be too early to predict how bad the virus might damage business. According to the Wall Street Journal in February 129 companies in the S&P 500 mentioned coronavirus in their quarterly earnings calls plus 600 mentions in company security filings in the past week alone.

The stock market is certain to be more volatile in the near future so if you invested for the longterm, stop constantly watching it or you’ll drive yourself crazy and might lose your health and your wealth.  Most likely the Coronavirus will begin to dissipate just as other viruses have in the past, and markets should normalize. Of course if this turns into a protracted pandemic all bets are off. Talk to your financial advisor about rebalancing your portfolio, diversifying holdings or adding alternative assets like precious metals or real estate. Just don’t be paralyzed by fear or worry yourself into the grave. Your health is more important.

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