The Coronavirus and Investing

By Charles R. Wolpoff, CFP®, JD, LL.M, AIF®, ChFEBCTM

When we’re faced with an onslaught of 24/7 scary headlines about the coronavirus, it doesn’t hurt to take time out to remind ourselves of some basic verities of investing.

With no intent to diminish the effect this illness may have on many people’s lives, too often investors react rashly to these types of scary and unpredictable events.

Barring a change in your own financial circumstances, the wise course is often to stick with your investment plan. We have found that those investors who react
to the movement of the markets, rather than stick with the wisdom of a carefully constructed personal financial plan, invariably fail. On the other hand, the long-term strength of wisely constructed, diversified investment portfolios based on such a plan and patiently adhered to is well proven.

In the last few decades, there has been a broad array of “end-of-the-world” type crises of various shapes and sizes that temporarily rocked the markets. Just a partial list includes: the Savings & Loan scandal, The Persian Gulf War and the later Iraq War, the ongoing Afghan War, the Los Angeles Riots, the bombing of the World Trade Center, Y2K, the dot com bubble, Hurricane Katrina, government shutdowns, 9/11, the housing crash, the 2008-09 Great Recession, Brexit, etc. The crises based on health scares alone make quite a list: SARS, Avian Bird Flu, swine flu, Ebola, the Zika virus.

These crises generally share two traits. First, at the time of the particular crisis, there was a sense that it was an insurmountable problem, that the investment damage from the resulting market turmoil would be irrevocable, that 401(k)s would turn into 201(k)s and stay that way, and that – unlike past crises that had come and gone – “This Time Is Different.”

And, second, it turned out that from an investment perspective the particular crisis was not fundamentally different, that the equity markets did recover and continue their long-term upward swing, and another four-word phrase would have been more appropriate: “This Too Shall Pass.” In fact, those investors most damaged were those who sold in the heart of the crisis and did not reenter the market until well after it had passed – when everyone was feeling more optimistic and a substantial market recovery was already well under way – thereby locking in their losses.

Markets need healthy corrections, and incidents like this coronavirus often trigger them. This is not the
first or last time we will go through something like this. Yet solid companies will continue to provide services and products and to adapt to the world around them. In the long term the markets generally reflect that adaptability. Indeed, in troubled times like these, the long-term resilience of our markets (and our free market economy) should be a source of comfort to us, as ballast in an often-stormy sea.

For more information, or if you are concerned about the effect of the coronavirus or other issues on your investment portfolio, please contact a member of our Client Service Team at 410-893-0560, or visit our website at

Prepared by Broadridge Advisor Solutions. Copyright 2020. Securities offered through Cambridge Investment Research, Inc., a broker/dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge Investment Research, Inc. is not affiliated with The Kelly Group. 48 East Gordon Street, Bel Air, MD 21014. Diversification and asset allocation strategies do not assure profit or protect against loss. Past performance is no guarantee of future results. Investing involves risk.