Reacting to the Unknown–Coronavirus – January 29, 2020

Stocks have repeatedly hit new hits. When shares are priced for perfection, they are more vulnerable to surprises. On Monday, stocks declined amid growing worries about an epidemic in China and its potential global economic impact.

Coronavirus has infected over 4,600 people and has killed 106, nearly all in China (CNBC as of January 28).

• As of January 27, the Center for Disease Control (CDC) reported 5 cases in the U.S.

In comparison, preliminary flu estimates in the U.S. are much higher, but investors have ignored the numbers.

Investor’s corner

Heightened economic uncertainty can create headwinds for stocks. Short-term investors shoot first and ask questions later.

In the past, we’ve seen epidemics generate short-term volatility: SARS in China in 2003 and Ebola in 2014.

While the number of cases are likely to rise and we may see additional volatility, reacting emotionally is not a sound investment strategy.

Created 2020-01-29 15:24:00