Preparation Is The Key

Preparation is the Key

During the last week of February, we have seen increased volatility in the stock markets due to the news about the Coronavirus. What started as a localized outbreak in central China has quickly spread to other parts of the globe, bringing with it as much anxiety as actual suffering.

When world events like this occur, we are typically asked the following questions…

“What should I do with my investments?”

“Should we change anything?”

Here are some key thoughts to remember during periods of global uncertainty:

1. Stay the Course: The time for change is prior to volatility in the markets. Our goal is to make sure that your portfolio is in the right asset mix for your phase of life prior to volatility, not during.

2. Quality: When times get tough in the equity markets, the quality of your investments are the key. Our portfolio managers focus on buying high quality companies. This does not mean that they are impervious to downturns, but they do hold up over time.

3. Fluctuation is Normal: Regardless of uncertainty in life, markets will fluctuate. The chart below illustrates recent health epidemics and their impact on the investment markets. In almost every recent example, the S&P 500 was actually higher 12 months following the breakout.

It may seem as if each time we have an event like this it is the first time, yet in reality they happen quite often. The coronavirus situation is serious, and is having an impact in the near term. That said, given the magnitude of of equity market increases leading up to this point, a correction will not come as a surprise to seasoned investors. We will continue to focus on the long term approach and prioritize the importance of your asset mix and quality of investments.