Current Behavior of the Markets: Coronavirus (Covid 19)

Current Behavior of the Markets: Coronavirus (Covid 19)

In light of the recent market volatility we’ve been experiencing this week, we thought we’d provide some perspective on the evolving situation.

Highlights

  • Global virus outbreak weakened stock markets around the world.
  • Flight-to-safety investing cycled cash flows out of cyclical stocks and into defensive sectors or bonds.
  • In prior epidemics, capital markets followed a pattern where markets bottom only to rally and recover.
  • Market corrections are a normal, healthy part of bull markets and provide an opportunity for risk-adjusted growth.

Please click on the articles below for further insight: GLC Market Review “The Coronavirus – a (viral) strain on markets in January and Manulife Investment Management “Coronavirus, a disruptive not destructive event

Below is a graph illustrating how the market reacted to previous viruses:

Global virus outbreak weakened stock markets

One thing’s for sure when it comes to investing: markets will fluctuate. There are a variety of factors that impact the market (in this case, coronavirus) and ups and downs happen every day.

We advise that it’s best to stay on course and understand that market corrections provide a great opportunity to buy into the market. Remember that although markets inevitably dip, history shows that they recover, too. That’s why it’s important to have a financial plan that can help you stay focused on your long‑term goals.

When we developed your portfolio, we spent time talking about your financial goals, reviewing how you feel about risk and looking at your time horizon. That helped ensure we designed your plan based on your unique situation.

Our perspective is that the coronavirus is a disruptive but not a destructive event.

Sources: GLC Asset Management, Manulife Investment Management and Canada Life

E&OE