In the modern era, we have far greater access to world news at just the click of a button, or from flash news alerts on various social media channels. This is not always a good thing as newspapers and websites publish news stories that will attract readers.
It can be all too easy to focus on these stories and get gloomy, disheartened or uncomfortable about the reported danger to life, society or wealth of these threats, the latest being the coronavirus.
However, these world and health events have happened throughout history. Over the past 20 years alone, there have been many material events that we may have felt uneasy about at the time. During such times, at least from the perspective of capital markets, it can be helpful to look at the past to ease our concerns about the present and the future. The past may not, of course, repeat itself but markets have been remarkably resilient, as you can see from the chart below.
Figure 1: The relentless rise of markets over time, despite world events
It is important to remember that in an efficient market, current world events and investors’ views are already factored into the price of equities / shares.
As hard as it can be, we need to remember to keep our emotions in check, and as a client of Wells Gibson, believe in the robustness of our portfolio and continue on your investment journey with a long-term view. Future news may make the outlook brighter or gloomier. No-one knows.
From a personal perspective these things are worrying, but we live day-to-day with many higher risks such as driving to work or catching the flu, which infects 1 billion people worldwide every year.
As the legendary investor, John Bogle, used to say, “This too shall pass.”