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Stock Market Performance After Epidemics

If you’re 9 episodes into a Netflix binge with nary a worry about the crisis du jour, then…as you were.  Carry on.  Nothing to see here.

It you’re letting mainstream media’s prognosticators and pundits penetrate your otherwise long-term, optimistic outlook on the stock market, and more importantly life in general, this is for you.

Yeah, sure.  The market has taken a hit this week.  But corrections are part of the process, part of being a long-term investor.  They’re normal and common.  You may recall a correction is a market pullback of 10%, while bear market territory begins at the 20% decline threshold.

This is not meant to diminish or make light of the seriousness of the coronavirus.  But let’s look at some prior epidemics and how the market responded.

SARS began in April of 2003.  Six-months later the market was up nearly 15% and 12-months later close to 21%.

Bird flu: June 2006…the S&P 500 up almost 12% 6-months later.  Better than 18% after twelve.

April of 2009, H1N1, Swine Flu.  Up almost 19% after six months.  A year out…36%.

MERS in May of 2013.  A year later…18% higher.

And Ebola in 2014…10% a year out.

Of course, history is no assurance of what will happen with coronavirus.  But I believe our best of the best are working on it.  And it’s not their first rodeo.

Stop planning for the end of the world, because that only comes once.  And this ain’t it.  And if you’re around when it does come…I’m going to predict you really won’t care where the S&P 500 closed that day.

By the way…binge this…Ozark on Netflix.  It’s about financial advisors.   Just remember…it’s fiction.  But very entertaining.

Data from First Trust L.P.  www.ftportfolios.com