HUNTSVILLE, Ala. — Fear from the outbreak of the COVID-19 led to a historic day on Wall Street. At the end of this week, the DOW has dropped almost 4,000 points.
Equities are on track for their worst week since the financial crisis.
LifeCourse Capital financial advisor Stephen Williams explained that company earnings and world events drive the stock market up and down. It’s one of the best places for us to be investing our retirement dollars, but it can also cause investors to overreact and sell off shares based on what company’s might do in the future.
That can cause dramatic changes in the market.
This week’s major drop was caused by a shock to supply and demand– that shock being the COVID-19.
“The coronavirus in China is messing up all the supply chains,” Williams said. “They make products for everybody, and no one’s getting their products, so they have things to sell but they don’t have the components to put everything together and ship it out.”
Investors can only speculate how bad things will get and many of them are pulling back.
‘They’re selling, and they’ll ask questions later,” Williams said.
Even with the changes we’re seeing, this is NOT the time to panic.
“We get corrections like this almost every year, this is not unusual to the point we’re at right now,” he said. “We’ve hardly dropped anything at all compared to what we’ve seen in the past.”
Patience is key. But of course, there is a chance it could get worse.
“That’s the wild card of not knowing the direction in the near term, but ultimately if you’ve got money for retirement, you need to leave it alone,” Williams said.
Various American multinational companies, including Apple and Microsoft, have already warned that they won’t be meeting their earnings guidance because of disruptions from the virus.