Coronavirus Concerns? Consider Past Health Crises

By all accounts, the recent market volatility is largely driven by ever-increasing fears about the potential effects of the coronavirus (COVID-19) and its ultimate impact on the global economy. Although many market observers contend that the market was overvalued and due for a correction anyway, the unpredictability, strength and suddenness of this historic tumble has been unnerving for even the most seasoned investors. Is volatility causing you to reconsider your investing plan? It may be worthwhile to pause and put recent events into perspective, using history as a guide.

A Look Back

Since the turn of the millennium, the market's negative response to health crises has been relatively short-lived. As this table shows, approximately six months after early reports of a major outbreak, the S&P 500 bounced back by an average of 10.47%. After 12 months, it rebounded by an average of 17.17%. There are no guarantees that the current market will follow a similar pattern, but it may be reassuring to know that over even longer periods of time, stocks typically regain their upward trajectory.

EpidemicMonth end*6-month performance
(S&P 500)
12-month performance
(S&P 500)
SARSApril 200314.59%20.76%
Avian (Bird) fluJune 200611.66%18.36%
Swine flu (H1N1)April 2009**18.72%35.96%
MERSMay 201310.74%17.96%
EbolaMarch 20145.34%10.44%
Measles/RubeolaDecember 20140.20%-0.73%
ZikaJanuary 201612.03%17.45%

Source: Dow Jones Market Data, as cited on foxbusiness.com, January 27, 2020. Stocks are represented by the Standard & Poor's 500 price index. Returns reflect the change in price, but not the reinvestment of dividends. The S&P 500 is an unmanaged index that is generally considered to be representative of the U.S. stock market. Returns shown do not reflect taxes, fees, brokerage commissions, or other expenses typically associated with investing. The performance of an unmanaged index is not indicative of the performance of any particular investment. Individuals cannot invest directly in any index. Actual results will vary.
*End of month during which early incidents of outbreak were reported.
**H1N1 occurred during the financial crisis, when, as during other periods, many different factors influenced stock market performance.

RBFCU Investments Group logoAfter considering this comparison, if you still have questions about how changing market dynamics are affecting your portfolio, contact RBFCU Investments Group. Our experienced investment professionals can offer perspective and help alleviate any worries you may have. To schedule an appointment, contact 1-888-294-0202 or rbinvestments@rbfcu.org.

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