As you know, we’ve been going through a period of significant market volatility in recent weeks due primarily to the uncertainty around the impact of COVID-19 (coronavirus).
Global capital markets experienced significant volatility this week and saw several big drops including yesterday. Key developments included:
- A continued rise in coronavirus case counts, particularly in Italy (which has now expanded travel and activity restrictions country-wide).
- A marked drop in oil prices after Saudi Arabia and Russia couldn’t come to an agreement on production cuts as a response to lowering demand due to coronavirus concerns.
- Government bond yields dropping to all time lows.
- Stock markets opening sharply lower on a couple of different days.
While the week so far has seen a significant decline, it’s important to note that the volatility is in reaction to a health issue, and not to any underlying economic, financial or political crisis. The economic foundations of the North American economy were strong entering this situation, with low unemployment and strong consumer confidence.
While this is a time of uncertainty, we do know a few things. Equity markets have a history of volatility, but stock markets go up over time. In fact, markets are up over 70% of the time. We also know that trying to time the market is difficult and that, at times like these, it’s those who continue to stay invested who are best positioned for long-term success. As your investment term increases, so too does the likelihood of stronger returns.
Challenging times like these reinforce the importance of having a personalized financial plan that you created with your Certified Financial Planner. A sound financial plan is not only designed to address your long-term goals, but also to absorb periodic market volatility. Your CFP professional can help you make the best decisions for your individual situation and not knee jerk or emotional financial decisions. Now more than ever, you should be in contact with your planner, who can answer your questions and give you the best possible advice.
My advice is to stay invested, stay focused on your long-term objectives and stay disciplined.
This column is brought to you by Michelle Weisheit CFP, IG Wealth Management and presents general information only and is not a solicitation to buy or sell any investments. Please contact your own advisor for specific advice about your situation.