Heron Wealth
New York City NYC Financial Planners Wealth Advisors & Investment Advisers
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Answers & Observations

Stay up to date with the latest personal finance developments, financial planning advice, investment news and retirement planning tips from our team of certified financial planners and experienced wealth advisors here in New York City.

A Client Asks: Will the Wuhan Coronavirus Outbreak Hurt My Portfolio?

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A client asked this week if we should sell stocks until we know more about how the Wuhan Coronavirus will be contained. Indeed, on Monday US and world stocks experienced the sharpest drop in three months, though rebounded smartly on Tuesday.

We replied, “People LOVE to freak out about the unknown.”

In a typical year in the US, deaths by source:

  • Gunshot – 40,000

  • Car accident – 40,000

  • Pneumonia – 50,000

  • Smoking – 480,000

So why are people going nuts about the deaths of 100 people in China, a nation of 1.4 billion, out of a worldwide population of 7.8 billion.? Because this outbreak is new, and the ramifications are as yet unknown.

Like any infectious disease, there is reason to be concerned. The response to containing the infection may disrupt travel and economic activity in the short term.

However, we’re not talking disruption at the level of the Black Plague, - 75-200 million deaths -30-60% of the population of Europe in 1350, or the Spanish Flu – 20-50 million victims out of a world wide population of 1.5 billion in 1918. So far, this infection is following a timeline similar to the SARS outbreak in 2003, over in 6 months with the deaths of 800.

For a reasoned analysis of the risks, read What Experts Do and Don’t Know About the Coronavirus Outbreak

So far, we see no reason to change investment strategy based on the timeline of this disease.

David EdwardsComment