In a wild week for stocks, the S&P 500 Index ended down 11.5% for the week. Fears of a global stall caused by the spreading Coronavirus drove stocks down the entire week.
The 10-year Treasury yield set a record low and ended the week at 1.156% as investors flocked to safety.
Disease outbreaks are nothing new, but can still cause some pain in the stock market. Below shows the initial drawdown for the S&P 500 Index during various outbreaks.
Sometimes the rebound back is quick and sometimes it takes a while to return to pre-outbreak levels. See the table below for how previous outbreaks affected global markets:
Immune: world epidemics and global stock market performance
Note: MSCI World Index scale is reflected in the left vertical axis.
Source: Charles Schwab, Factset data as of 1/21/2020. Past performance is no guarantee of future results.
Our advice over the past year has been to be at or near your risk targets. The important part during this decline is to not panic. Selling, while tempting, locks in losses and can cause investors to miss the gains on the way back up. Instead, we recommend to take a look at target allocations and remember why you set them. If you have questions or would like to discuss your portfolio or the market in general, please email us or give us a call. - JR
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