Keep Calm and Carry On: The Coronavirus Scare in the Context of Historical Perspective

Keep Calm and Carry On: The Coronavirus Scare in the Context of Historical Perspective

by Bo Billeaud on March 2, 2020 The All-Weather Investor

Global markets appear to be discounting the effect that the Coronavirus will have on economic growth.  While it is now generally understood and accepted that economic growth will be impeded by this viral outbreak, it cannot be known yet to what extent, or for how long.  In the face of this uncertainty, financial markets did what financial markets do.  Stocks were sold and bonds were bought.  Markets do not like uncertainty.

While the speed of this correction has been swift, the outcome is not terribly surprising.  Unless the coronavirus mutates into the next Andromeda strain, the financial markets reaction to this situation is not terribly different to the last 25 corrections that market participants were battered with since the 2009 market low, including four other virus scares, H1N1 in 2009, MERS in 2012, Zika in 2013 and Ebola in 2014.  There was also SARS, but that outbreak predates the 2009 market low, as it occurred in 2003.  The more things change, the more they stay the same.

Our All-Weather design was built for turbulent periods such as this.  While we don’t know to what extent the markets will remain turbulent in the short term, nor do we know the future path for this current viral outbreak, we do know from history that every market correction seems like a crisis in real time and an opportunity in retrospect.

Corrections are scary.  Anyone who says otherwise is silly.  But in the long-run, they all ultimately have in fact been an opportunity for those who can “keep their heads on straight when all others are losing theirs” …Rudyard Kipling.

Weeks such as we’ve all just experienced are the price of admission in order to potentially realize the larger gains that the financial markets have offered over time.  We deal with them as we can, and will continue to do so.

Please do not hesitate to reach out with any questions or concerns you may have.


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About the Author

Joseph “Bo” Billeaud is the founder of Billeaud Capital Management. After earning a BS in Chemical Engineering (University of Louisiana, 1979) and while working in industry for seventeen years, Bo developed the market risk-control models and investment philosophy that undergirds all BCM portfolios. Since effecting a formal career change in 1996, Bo has helped BCM grow into a respected asset management and financial planning firm currently overseeing $400+ million dollars for individual, corporate, trust, retirement and 401(k) accounts…. Read more.