From Our Blog:

3 Things to Know About the Coronavirus and its Potential Impact on Your Portfolio

By now we have all seen the headlines and disturbing images associated with the Coronavirus. There are previously bustling cities that have been turned into ghost towns, hundreds of individuals quarantined on cruise ships for weeks, and thousands of families experiencing heartbreaking loss.

We have seen and read the news stories, yet are still left wondering what exactly is it, why is it affecting the stock market, and what should I be doing about my portfolio?

Here is a quick rundown.

1. What is the Coronavirus?

The Coronavirus (COVID-19) is a viral illness that originated in the Chinese city of Wuhan, in the Hubei Province of China. It attacks the respiratory system and is primarily spread between people via droplets from coughs and sneezes.

As of February 24th there have been 79,551 confirmed cases and 2,627 deaths, with at least one confirmed case in 34 countries. The vast majority of the cases and deaths have been recorded in China, although some experts dispute the accuracy of these statistics, claiming the actual numbers in China are in fact worse. It has already killed more people than both the SARS and MERS outbreaks, both of which had an impact on global financial markets.

2. Why is it affecting international markets?

While every death is tragic, the current and potential economic impact of COVID-19 goes far beyond the number of deaths. The response of the Chinese government to the outbreak of the virus has been to quarantine affected areas and keep people away from large gatherings by forcing them to stay at home. This has temporarily shut down factories and jobsites across the country as workers are under lockdown.

With many globally integrated supply chains starting in China, this reduction in productivity could have a significant impact on the global economy if it continues for a considerable length of time or spreads to other countries. Even if there is demand for a company’s product, they may face difficulty meeting production quotas if their supply chain is affected. Another area of the economy that could face significant disruption is the tourism industry, as several nations have instituted travel bans and many potential tourists are choosing to stay home.

The IMF warned that the outbreak could reduce global economic growth by 0.1% this year, and by as much as 0.4% in China. This weekend’s news that there were confirmed “cluster” outbreaks in South Korea, Iran, and Italy reignited fears of the spread of COVID-19 and its potential impact on the global economy.

3. What should I do about my portfolio?

Market selloffs triggered by exogenous or “black swan” events are reminders that an investment portfolio should always be tailored to an investor’s risk profile, combining both the investor’s ability and willingness to take risk. It should not simply be an asset allocation derived by your age, or the amount of risk you felt comfortable with in the recent bull market.

This recent selloff following the market gains of 2019 is a good opportunity to make sure your portfolio is aligned with your risk tolerance and is set up to achieve your long term financial goals.

How We Can Help

One of our 4 core investment principles is getting your risk right. Using our tool, Riskalyze, we can easily pinpoint the amount of risk you are comfortable with and structure your portfolio to match. While exogenous events such as this can cause attention grabbing, panic inducing headlines, we believe that when you have your risk right you can stomach these large market downturns knowing that your portfolio is designed to withstand the market volatility.

Contact us today to make sure your portfolio is designed to match your Risk Number.   

For more detailed information, please read “Heartbreaker: Spreading Impact of Coronavirus” by Charles Schwab’s Senior Vice President, Chief Investment Strategist, Liz Ann Sonders.

preview-liz-ann-sonders-coronavirus

What's Your Risk Number?

GET STARTED WITH RISKALYZE

A 5-minute questionnaire covers topics such as portfolio size and top financial goals, while showing real dollar amounts of how much you are willing to risk for potential gains. Once complete, you will have a personalized Risk Number®. It’s fast, free, and displays your number instantly.

Investor Education
Brooke Peterson

CARES Act Reminder: RMD Rollbacks

The CARES Act was passed back in late March to provide economic relief during the Coronavirus pandemic. An important piece of the initial legislation was the waiver of required minimum distributions (RMD) for 2020. The initial legislation did not include relief for those who had already taken a portion or the full RMD prior to […]

Read More »
the-fed
Investment Strategy
Ryan Baldwin

The Fed’s Pandemic Promise

Though we are still in the midst of the COVID-19 pandemic, financial markets are now in a much different place than they were just three months ago. After one of the sharpest declines in U.S. stock market history, the S&P 500 rallied in the second quarter. As states began to reopen […]

Read More »
529-plan-refund
Investor Education
Steven Hannigan

What You Can do with that 529 Refund

As Coronavirus spread through the United States, what should have been the spring semester for college students was suddenly upended. In many cases students were told to pack up and leave as campuses were closed, and in nearly every college, classes were either canceled or moved online. The world really turned upside […]

Read More »

1801 Porter Street, Suite 500
Baltimore, MD 21230
410.685.9685

3877 Fairfax Ridge Road, Suite 200N
Fairfax, VA 22030
703.591.7200

Copyright © 2020 GGM Wealth Advisors. All Rights Reserved.

Legal Disclosures | Privacy Policy | Careers