With the coronavirus crashing markets around the globe, Northern Trust Asset Management conducted a webinar to review historical events, in terms of other epidemics and effects on markets, in hope of injecting some sanity into investing.
“Be thoughtful about what you’re doing, especially with managing investment risk,” Chief Investment Officer Bob Browne said on the webinar, held Tuesday.
Fear is everywhere, as judged by the volatility index known as the VIX topping 82 on Wednesday, after a 43% jump on Monday. Browne believes that global growth already was going through restructuring, and will “even moreso” with the coronavirus.
To put the coronavirus in perspective, Browne showed a chart with data from the World Health Organization comparing relevant outbreak references. On one end of the scale was Ebola. The 2014 outbreak had a 25-90% mortality rate, infecting roughly 29,000 with about 11,000 deaths. Two of those were in the United States.
The swine flu pandemic in 2009 had a .02% mortality rate, infecting 11%-21% of the global population, with up to 575,000 deaths worldwide, 12,500 of them in the United States.
In comparison, the chart showed that Covid-19 had a 3%-4% mortality rate with (and this changes daily) about 165,000 people infected globally, with 6,500 deaths, and 41 of those in the United States. However, as of Wednesday, there are more than 214,000 cases globally, with more than 7,700 cases and 118 deaths in the United States, according to Johns Hopkins.
What is especially different about Covid-19 is its effect on the stock market. After the global health crisis was declared, the S&P 500 fell 17.4%. Other epidemics didn’t have that dramatic of a reaction. In fact, six months after the declaration of swine flu amid the Great Recession, the market was up 26.2%, while after SARS, the market was up 22% (The market rose 5.7% after the Ebola outbreak).