February 28, 2020
Our View on the Coronavirus Outbreak and Its Economic Effects
Over the past few trading sessions there has been increased volatility. We believe this volatility is primarily related to the Coronavirus outbreak and its short-term effects on the global economy. If this is creating any anxiety for you, please read on for our view and our actions.
In the fourth quarter of 2019, the Dowling Group portfolio managers adjusted our client portfolios in anticipation of the coming volatility in the markets. We consider research from top analysts, economic data points, and recommendations from our portfolio managers when we make these portfolio changes.
It is important to note that the total return of the S&P 500 in the same year as a virus outbreak has yielded a positive total return for that year.
Key virus outbreaks to be considered:
|Virus||Date Range||Trading Days||S&P 500 Change||S&P 500 Total Return for Year|
|SARS||Jan 2003–Mar 2003||38||-12.80%||2003 = +28.68%|
|Avian Flu||Jan 2004–Aug 2004||141||-6.90%||2004 = +10.88%|
|MERS||Sep 2012-Nov 2012||43||-7.30%||2012 = +13.41%|
|Ebola||Dec 2013–Feb 2014||23||-5.80%||2014 = +16.00%|
|Zika||Nov 2015–Feb 2016||66||-12.90%||2016 = +11.96%|
* As of 02/27/2020 4:00PM EST
Source: CNBC, Citi Research, FactSet, Koyfin, YCharts
All the major viruses mentioned above have had The World Health Organization, The Center for Disease Control, and leading pharmaceutical companies come together to contain the outbreak. We understand that short term volatility in the markets can cause anxiousness, but we want to remind our clients that we are generally investing for a long time horizon. As history has proven, the markets usually tend to bounce back.
Please reach out to us if you would like to discuss these recent events or anything else we can be of assistance with. As always, thank you for your trust in our process and our people.
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management
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- Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
- Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
- The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
- All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
- The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
- The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
- Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
- The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
- The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
- International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
- Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
- Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
- Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
- Past performance does not guarantee future results. Investing involves risk, including loss of principal.
- You cannot invest directly in an index.
- Stock investing involves risk including loss of principal.
- These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
- This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with the named broker/dealer.
- The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
- Consult your financial professional before making any investment decision.
ADV & Investment Objectives: Please contact The Dowling Group if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Our current disclosure statement is set forth on Part II of Form ADV and is available for your review upon request.
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