In this week's Arista Advice, Paul L. Moffat of Arista Wealth Management discusses the coronavirus outbreak and how to remain calm and invested during this time and the possible long-term consequences of panicking on your portfolio.
Hello. Welcome to this week’s Arista Advice. Hope you’re well and having a great day.
The media has everybody concerned right now, and let’s talk briefly about the coronavirus.
Did you know that in 2005 there was the bird flu?
Did you know that in 2009 there was the H1N1 outbreak swine flu?
Remember in 2014 it was the Ebola outbreak?
And here we are in 2020 facing the coronavirus outbreak.
Let’s take things in perspective, and remember that health issues, viruses, diseases are a part of living for all of us human beings.
Let me share with you another slide that’s very important.
Going back to 1990, if an investor stays invested, their total rate of return ranges around 9.3% on an annual basis, but if they panic whether it was in 2014, 2009, 2004, or ’05 with the bird flu, or in 2020 with the coronavirus and they panic and they jump out. Well, missing the top five best days, your rate of return goes from 9.3 down to 7.75. If you panic and say “Let’s sit out for a month.” and you miss the 25 single best days, your rate of return gets cut in half down to 4.18.
The velocity of the decline also is the velocity of the incline, and just as it drops suddenly and dramatically it can also climb sudden and dramatic. Let’s stay focused. Let’s be calm. Let’s allow the government agencies, the corporations, and the health care agencies and corporations dig into this, spend their time working on a solution, and I am certain we will all come out of this just fine.
Hope you’re well. Have a great day. We look forward to talking to you soon.