If there’s something we Brits do well its stay calm when things start to get a bit choppy. And I think it’s fair to say, with the outbreak of Coronavirus, we are in very choppy times!
I’m sure most of you who are reading this will have seen the negative impact Coronavirus has had on the world economy and subsequently the uncertainty seen in the global stock markets. It would be very easy to panic and assume the worst case scenario which often leads to irrational and bad decisions being made. However, I want to take this time to offer you all a little reassurance and perspective.
As America is currently the world’s largest economy and thus directly affects us all, let’s look at the impact the Coronavirus is having on their main stock index, the Dow Jones, and how this compares to previous periods of uncertainty. At the time of writing this article the Dow Jones has fallen from its record high level of 29,551.22 at 12th February 2020 to 23,553.22 on 12th March 2020. This fall represents a 20.30% drop, which there is no denying that is a large drop in a short space of time.
Let’s now look at how the Dow Jones reacted during the 08/09 financial crisis. Between 1st October 2007 and 5th March 2009, the Dow Jones fell from 14,087.55 to 6,594.44, which represents a drop of 53.19%. So why is this relevant? Well from the Dow Jones low at the beginning of 2009 to the start of February 2020 it increased by 22,788.13 or 186.67%.
All of this tells us one thing, we’ve been here before. Yes, it’s not very nice but there is a light at the end of the tunnel. We firmly believe we will, just like in 08/09, recover from this position and it’s simply a case of when and not if.
So, let’s do what we do best – keep calm and carry on.