We have our first surprise of the year: The Coronavirus (AKA COVID-19). Just last month I wrote in my annual forecast that we will be surprised by something this year. This is likely the first of several unexpected, unpredicted events we will experience in 2020.
It’s a good time to take a step back and identify what we know, what we don’t know, what we can control and what we can’t control. Those types of thinking exercises can help us make good decisions.
The Coronavirus is still in its infancy. We don’t know how much it will spread nor the economic toll it can take. It could be over in a few weeks with little economic impact or it could go on for some time and affect global economies. We have had similar health scares in the past 20 years: SARS, Avian Flu, Swine Flu and Ebola. All of those elicited similar panics in the media and temporary economic impact.
If COVID-19 worsens, corporate earnings could be impacted, and the stock market may go down. But, if it is anything like the past, it would be temporary. Therefore, if the market goes down, we should be looking at good entry points to buy high quality investments on sale. Economic and stock market crises may be scary in the moment, but they provide lower prices for investors that actually want to “buy low”.
Turn on any media today and the headlines are dominated by Coronavirus. What if nothing was happening? What would they be talking about? And what happens when Coronavirus runs it's course? What will the media talk about then? I don’t know – except, I know they will find something and make it seem like a very big deal.
We can’t control the news. We can’t control how others behave. But we are in complete control of what we choose to pay attention to and how we choose to respond. Choose wisely. Let's have a conversation about your situation now.
©2020 The Behavioral Finance Network. Used with Permission
The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC. Due to volatility within the markets mentioned, opinions are subject to change with or without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.