The world is watching with concern the spread of the new coronavirus. The uncertainty is being felt around the globe, and it is unsettling on a human level as well as from the perspective of how markets respond.
At VIA IV, it is a fundamental principle that markets are designed to handle uncertainty, processing information in real-time as it becomes available. We see this happening when markets decline sharply, as they have recently, as well as when they rise. Such declines can be distressing to any investor, but they are also a demonstration that the market is functioning as we would expect.
Below are a few key points to consider. Please contact us with any questions or comments.
As the saying goes, investing in real estate is all about location, location, location. Investing in a globally diversified equity stock market has a similar imperative: Patience, patience, patience.
Returns may or may not come when you want them to come, but successful investors are usually patient people. For example, when the S&P 500 had disappointing returns in the first decade (2000-2009), one would have had a less than zero return, yet that doesn’t mean it was a bad place to invest. Why? Simply put, it’s because we don’t know when the returns for asset classes will happen — but it may not offer any of the immediate gratification we’ve all come to expect in this society.
There’s an image in people’s minds of the stock market being a roller coaster. In other words, you start at one point, go through a wild ride with a lot of ups and downs, twists and turns, and then, at the end of the ride, you basically don’t feel well and end up in the same spot.
Market-related anxieties, fears, and hopes are always going to be out there — along with headline news stories. The headlines might make your head spin. Stop worrying! These concerns are already factored into the price of the stocks and businesses.