Coronavirus: What Pandemics Often Do To The Market

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Today’s Question:

Are you worried about how coronavirus might impact the market or your financial plan? Let’s look at several past epidemics to see what the market has done historically.

Click on the timestamps below to jump to specific topics. 

Confidence Corner

In light of coronavirus, we are talking about different pandemics and how they have changed the market. What kind of world events have impacted your finances? How do you prepare for them financially?

We can’t know exactly what the market will do, but we can see historically what has happened when the world is hit with a health-related pandemic. On this episode of the Financial Answer podcast we will talk about Covid-19, SARS, Ebola, swine flu, and the Spanish flu.

Last year was really good in the market, but right now we are anticipating a global scare due to coronavirus. While there are serious health-related components and several deaths involved, we will focus this podcast on the financial impact on the market. In many of these cases, production was slowed while people were not at work which then caused some downturns in the market.

Timing of things is what can impact you the most. If you are several years (or decades) away from retirement, this shouldn’t cause you to have a knee-jerk reaction. On the other hand, if you are within a year or two from retirement, you should already be allocated in a more conservative way because we can’t predict the market. Obviously, this isn’t ideal, but it’s not realistic to assume the market is without risk. Working with an advisor you trust will help you to set a plan in place so you can be disciplined to weather the market volatility or health scares the world is experiencing.

We can’t see the future and don’t know what will happen right now with the coronavirus. It could get worse or it could turn around quickly. Try not to panic, but have a plan in place that you feel comfortable with. Hopefully looking at history can help you keep perspective and create a reasonable financial plan. (And don’t forget to wash your hands!) 

Listen to the full episode above or click on the timestamps below to hear about the various pandemics of the past.

[1:25] – All pandemics affect the market.

[3:19] – Coronavirus is definitely having an impact on the world right now.

[5:00] – SARS caused a drop in the market, but it was back within a few months.

[7:09] – Ebola affected the market for about eight months.

[11:43] – Swine flu caused a dip on top of the market downturn we were already experiencing in 2009.

[13:02] – DOW Jones market data shows that things rebound within six months.

[15:20] – The Spanish flu killed millions in 1918, but the market only declined 10 percent.

 

 

A Point Of Wisdom:

 

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