Markets and Outbreaks

February 25, 2020

After a phenomenal 2019 for both stocks and bonds, we would expect the stock market to eventually take a breather. Post WWII, a correction has occurred every 1.5 years on average, so market corrections are normal, and even healthy in many ways. The coronavirus concern has provided the market a reason to correct. The concern is justified, but as usual, justified with a lot of “what ifs”. Looking at the past, we have seen several downturns in the market due to health scares. We have seen the market correct anywhere from 5% to nearly 13% within a month or so, but recoup after 6 months on average. No one can predict the beginning and/or end of these corrections, so the key to taking advantage of market volatility is to stay invested, stay diversified, rebalance, and remain disciplined.