There are lots of worries in the world today.
The spreading of the Coronavirus Disease 2019 (COVID-19) has created many headlines in the news. For the financial news media, there seems to be lots of noise concerning the markets, especially with the virus and its long-term impact on the stock markets. There seems to be few facts and many opinions. Some analysts are guessing about long-term impacts to supply chains. Others are giving hunches about travel restrictions or where the next outbreak will happen.
We are not medically trained. But, to stay informed we look to the medical experts like the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH) for information. These medical experts are not recommending panic and hysteria. It is a serious situation for those who contract this virus and is worrisome for many people. Like anything else, we need to stay informed and some preventative actions can make a big difference.
For the impact this virus can have on the financial markets over the long-term, we look at the facts:
The decline of the stock markets over the past week have brought us down from all-time record highs on February 19, 2020. The S&P 500 is now at the same level as on October 14, 2019, just 4 months ago. At this point in October, the S&P 500 was up 17.5% year-to-date in 2019 and finished up over 30% for the year.
Most important for us here at Prato Capital Management – what is the impact for our clients? The decline in the markets over the past week have had very little impact on the planned outcome of their Financial Life Plan. Our planning models account for market declines and corrections on a regular basis and this is one of those times. Many of the declines in our planning models are much more significant than we have had.
Having the proper diversification and risk tolerance for each client has also minimized the decline of their portfolios. A globally diversified portfolio of stocks and bonds have declined from the highs last week significantly less than the overall stock markets.
Panic and hysteria should not be part of your investment strategy and certainly not part of your future. A disciplined approach using almost 100 years of market history as a guide has worked through difficult times over the past 25 years and given our clients the peace of mind few have when the markets become volatile. This is the benefit of investing with Prato Capital Management using a Financial Life Plan as your guide to your financial future.
In volatile times like these, do you have a plan?
Prato Capital Management – Where Integrity Meets Discipline.