We have our first surprise of the year: The Coronavirus.
Our annual forecast always states that we will be surprised by something during the year. This is likely the first of several unexpected, unpredicted events we will experience in 2020, especially given that it is an election year.
Now is a good time to take a step back and identify what we know, what we don’t know, what we can control and what we can’t control. Those types of thinking exercises can help us make good decisions.
The Coronavirus is running its course...globally.
It appears to be affecting global economies and it could be some time before the virus is under control. Let us not forget that we have experienced many health scares over the past two decades, each one very scary at the time. Do you remember SARS, Avian Flu, Swine Flu and Ebola? All of those elicited similar panics in the media and temporary economic impact. As far as the stock market goes, just look what the market has done in the past 20 years despite not one, but several global health care scares.
Corporate earnings may be impacted resulting in a lower (or negative) GDP
This could cause the markets to sell off as analysts reduce their estimates, and the media may again predict a recession (as they did multiple times in 2019). While never fun to experience, these moments provide investors an opportunity to actually buy low. Buying something on sale at a supermarket is easy; it is gut wrenching in a stock market. That kind of discipline is what separates successful investors from just the average.
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