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Is the Coronavirus a Risk to Your Investments?

Early Monday morning I was watching the stock market take a big hit well before it opened today at 8:30 am. The question that I set out to answer is how big of a risk is the Coronavirus to the stock market? I was researching this for my client letter that I write each week. This is what I ended up writing:

The markets are acting as if this has very negative implications. I wouldn’t have thought the markets would react this negatively. As I write at 6 am on a Monday, the overnight markets are down over 450 points which means that is where the Dow Jones is likely to open today's trading. Of course, things can change on a dime.

The Corona Virus as compared to the 2003 outbreak of severe acute respiratory syndrome or SARS tells us this outbreak could be something to be concerned about. According to the CDC:

“During November 2002 through July 2003, a total of 8,098 people worldwide became sick with severe acute respiratory syndrome that was accompanied by either pneumonia or respiratory distress syndrome (probable cases), according to the World Health Organization (WHO). Of these, 774 died.”

Thus far just in China (and not world-wide) 2,862 cases of Coronavirus have been detected and 81 people have died from it. In less than a few weeks, that makes up already 35% of the cases of SARS cases that occurred over a 6 month time period. What makes this potentially more of a risk for the markets is the fast spreading nature of the Coronavirus versus SARS. The concern is that healthy people could be infected with it and it's contagious well before the symptoms present themselves.

It creates what markets hate….uncertainty. Obviously the greater concern is potential loss of life.  

As I always say, know your risk level of the investments you are using to grow in or towards your retirement.  


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