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A note on the Coronavirus & the Markets

| By: Randall E. White, CFP®, RICP®, CRPC®, CMFC®

A note on the Coronavirus & the Markets
Monday, 03 February 2020

We at TriCapital take seriously the high degree of trust placed in us by our valued clients and I thought it would be appropriate for me to take a minute to address the current global viral epidemic that is impacting the markets.

On Friday, January 17 – after a spectacular 40% runup that started the day after Christmas 2018 – the Standard & Poor’s 500-Stock Index closed at 3,329.62.

Two weeks later to the day – last Friday, January 31 – the Index closed a little over three percent lower, at 3,225.52. (Indeed, more than half that damage was done on Friday.)

As a result, we have been invited by financial media to suspect that the blended value of 500 of the largest, best-financed, most profitable businesses in America, and indeed the world, has “lost” three percent – with more “losses” to come – due to the outbreak in China of a new strain of coronavirus.

Please permit me to doubt this, and to suggest that you – as goal-focused long-term investors – join me in doubting it.  

I do not claim to have any idea how far this outbreak will spread, nor how many lives it will claim before it is brought under control. Having said that, I’m reasonably certain that many (or perhaps most) of the world’s leading virologists and epidemiologists are actively working on it, and I believe that their efforts will ultimately succeed. Clearly, this is nothing more (or less) than my personal opinion, but if the rich history of similar outbreaks in this century is any guide, this would seem to be a reasonable hypothesis.

I draw your attention to:

  • SARS in 2003-04, also originating in China 
  • The bird flu epidemic in 2005-2006
  • In 2009, a new strain of swine flu
  • The Ebola outbreak in the autumn of 2014
  • The mosquito-borne Zika virus outbreak in 2016-17

Without belaboring the point: the super-spreader of SARS – a fish seller – checked into a hospital in Guangzhou on January 31, 2003, basically infecting the whole staff. The epidemic exploded from there.

On that first day of the litany of epidemics cited above, the S&P 500 closed at 855.70 (as reported by Yahoo Finance). Seventeen years and six epidemics later (including the current one), this past Friday the Index closed fairly close to four times higher. I’m confident that you see where I’m going with this. While I am not minimizing the seriousness of the current outbreak in any way, I wanted to help you keep your long-term perspective in mind.

As always, I welcome your inquiries around this or any other issue. In the meantime, I think the most helpful – and certainly most heartfelt – investment advice I can offer would be that you watch the news with little more than a passing interest and maintain your focus on fully enjoying this blessed life we are privileged to have.

Most sincerely,

Randall E. White, CFP®, RICP®, CRPC®, CMFC®

President


Securities offered through Triad Advisors, LLC, member FINRA/SPIC. Advisory services offered through TriCapital Wealth Management, Inc. TriCapital Wealth Management, Inc. is not affiliated with Triad Advisors, LLC.

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