Mar 04, 2020

Market Update: Uncertainty, Fear Drive Volatility

By Kara Murphy, CFA® Chief Investment Officer

The continued spread of coronavirus has swiftly driven the equity markets into negative territory for the year. Heightened fear and uncertainty surrounding the outbreak have also pulled Treasury yields to all-time lows, and prompted several high-profile companies to cut their near-term earnings outlook. This type of volatility can understandably cause some concern about investment portfolios.

But it’s important to keep in mind that we’ve seen similar selloffs before. In these instances, there seemed to be no end in sight, but the market and global economy proved resilient over the long term.

That said, we are closely following current developments in order to identify how the new coronavirus outbreak might impact markets. During times of heightened uncertainty, history can be a useful guide. In examining past epidemics, we find that Treasurys, a safe-haven asset, have tended to outperform equities in the initial stages of an outbreak. And, in fact, this week Treasury yields (which move inversely to prices) touched new lows. But the underperformance of stocks surrounding past epidemics has proved temporary, lasting roughly three to four months.

Uncertainty drives market volatility, but it also increases the risk of investors making rash, fear-based decisions. It’s important to stay focused on your long-term plan, despite the daily drumbeat of troubling headlines. A United Capital financial advisor can help you put market volatility in context and assist with positioning your portfolio to align with your long-term financial goals.

Kara Murphy
ABOUT THE AUTHOR

Kara Murphy, CFA® Chief Investment Officer

United Capital Financial Advisers, LLC d/b/a Goldman Sachs Personal Financial Management (“GS PFM”) is a registered investment adviser and an affiliate of Goldman Sachs & Co. LLC and subsidiary of The Goldman Sachs Group, Inc., a worldwide, full-service investment banking, broker-dealer, asset management, and financial services organization.

The information contained herein is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered investment advice. GS PFM does not provide legal, tax, or accounting advice. Clients should obtain their own independent legal, tax, or accounting advice based on their particular circumstances. Please contact your financial adviser with questions about your specific needs and circumstances.

Information and opinions expressed by individuals other than GS PFM employees do not necessarily reflect the view of GS PFM. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.