Throughout history, there have been dozens of virus\noutbreaks, epidemics, and a handful of pandemics. Virtually all of them resulted in short-term<\/strong>\nvolatility and downside<\/em>, followed by long-term price appreciation. In my\nview, it is very reasonable to expect a wild ride for the next few weeks. But that\ndoes not mean the right move now is to sell or panic. Longer-term, the actual\nimpact to the equity markets has almost always been fleeting.<\/p>\n\n\n\n _________________________________________________________________________<\/p>\n\n\n\n Brace Yourself for More Volatility with Our Stock Market Report<\/a><\/strong> So, in the\nmidst of volatility, I recommend focusing on the long-term and not giving into the\nfearful narrative that surrounds current volatility. If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!\u00a0 ______________________________________________________________________<\/p>\n\n\n\n The Virus Cycle: Short-Term Pressure Followed by Longer-Term Recovery<\/strong><\/p>\n\n\n\n A closer look at more recent outbreaks unveils a similar\npattern to what we\u2019re seeing today. Historically, the number of confirmed cases in\nvarious epidemics has tended to rise sharply for 8 to 10 weeks, then peaked. A\nshort-term dip in stocks generally accompanies the initial (frantic) rise in\nconfirmed cases, with a recovery in prices as the situation comes under\ncontrol. Over a 38-day trading period during the height of the SARS\nvirus back in 2003, the S&P 500 index fell by -12.8%. During the Zika\nvirus, which occurred at the end of 2015 and into 2016, the market fell by -12.9%.\nPanic-selling episodes happen, but they have never lasted. <\/p>\n\n\n\n The 1957 Asian flu pandemic was another very significant\npandemic in modern history. Advancements in scientific and medical technology\nallowed the virus to be detected and treated within a year, a time frame we\nmight reasonably expect to be 1-2 months today. The S&P 500 went up +24% in\n1957 and 2.9% in 1958.3<\/sup> <\/p>\n\n\n\n Even though it was only 10 years ago, many people forget the\nscope and gravity of the Swine Flu pandemic. The Centers for Disease Control\nestimates that from April 12, 2009 to April 10, 2010, there were 60.8 million cases,\n274,304 hospitalizations, and 12,469 deaths in the U.S. alone. Globally, the\nnumbers approached 1 billion infected <\/em>and\nsome 280,000 deaths.4<\/sup> But as the virus spread and hysteria enveloped\nthe media and the world, the S&P 500 was beginning one of the biggest bull\nruns of all time. Selling into the Swine Flu pandemic would have been a\nmistake. <\/p>\n\n\n\n Historically, Selling\ninto Virus Outbreaks Has Been Proven Costly<\/strong><\/p>\n\n\n\n The Bottom Line for\nInvestors<\/strong><\/p>\n\n\n\n My goal in this column is not to downplay the seriousness of\nthe coronavirus outbreak. As of this writing, there are over 90,000 confirmed\ncases and over 3,000 deaths.6<\/sup> But at the same time, history tells me \u2013 as an\ninvestor \u2013 that that the fear<\/em> of the virus outbreak will likely far\noutweigh the actual economic and market impact it will have. Selling now,\nin my opinion, would mean pricing-in a lengthy recession and bear\nmarket\u2014neither of which seem likely. <\/p>\n\n\n\n In my view, selling into virus outbreaks has proven costly\nthroughout history because the stock market\u2019s value is not based on what\nhappens in the next quarter or two. Equity value is based on longer-term\ncorporate earnings generation, which is driven by interest rates, inflation,\nbusiness investment, innovation, and the regulatory environment. I think these\nmacro conditions are still conducive to growth, even as the virus spreads.<\/p>\n\n\n\n
At the end of the day, equity value is based on longer-term corporate earnings generation, which is driven by interest rates, inflation, business investment, innovation, and the regulatory environment \u2013 All of which are still conducive to growth, even as the virus spreads.<\/p>\n\n\n\n
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\nOur just-released Stock Market Outlook report can\nhelp you do just that. This report contains some of our key forecasts to\nconsider such as:<\/p>\n\n\n\n
IT’S FREE. Download the Just-Released March 2020 Stock Market Outlook<\/a>1<\/a><\/sup><\/strong><\/p>\n\n\n\n![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/image-1-of-1-1.png\")
Source: Charles Schwab2<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/Picture1.png\")
\u00a0Source: Zacks Investment Research5<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n