A Different Degree of Wealth

What Does the Coronavirus Mean for Investors?

Global Pandemic Concerns Incite Volatility
The spread of the coronavirus continues, with more cases appearing outside China even as the rate of new infections there continues to slow. Much of northern Italy remains in lockdown, while Iran has seen panic-buying of food as that country is the epicenter of the outbreak in the region. 

Growing in tandem with the spread of the virus is the list of major companies issuing warnings about sales and profits. Mastercard Inc. cut its revenue guidance and United Airlines Holdings Inc. scrapped its 2020 profit forecast altogether.

It’s tempting to conclude that prices have changed more than the facts, although the reality has greater nuance. Speculators and day-traders are faced with the unpleasant task of assessing the economic downside risks created by the coronavirus with little to no hard information on the key characteristics. 

Their default stance appears to be ‘when in doubt, just sell stocks and buy Treasuries.’ The logic is sound up until a point; especially with 10-year yields within striking distance of the all-time lows – to say nothing of the -3.35% one-day decline in the S&P 500. 

Historical Health Scares & Markets
With the perspective of hindsight, it appears that past health scares, including SARS (2003), Swine flu (2009) and Ebola (2014), tend to follow a standard script for investors, the markets, and the economy. It includes:

  • The spread of the disease and rising death toll insert a sense of alarm among investors, and equity markets sell off.
  • Safe haven buying lifts Japanese yen and gold. Government bonds strengthen—the 10-year U.S. Treasury rate is now 4bps away from an all-time low.
  • Commodity prices fall in anticipation of weaker global demand. Oil prices plunged 6% last week to six-week lows, while copper prices sustained a six-day losing streak. 
  • People shop less and delay travel. Companies turn cautious and postpone investments. 
  • However, as health care authorities work to contain the outbreak and the number of new cases falters, financial markets subsequently rally and the economy rebounds. After the three earlier viral outbreaks this century, U.S. equities quickly recovered. 

Having invested through three recent health epidemics, it is tempting to take a cavalier view on the ramification from the Wuhan virus, yet it’s worth acknowledging the threat of SARS and last time a severe epidemic had repercussions for global markets.

The SARS-panic of the early 2000s is a distant and unpleasant memory, but the historical context offers useful guidance in case the situation quickly and unfortunately devolves. Within the period from the initial report of the virus in late 2002, to the World Health Organization declaring the disease contained in Jul ‘03, there were several noteworthy market moves as investors assessed the potential fallout. 

In the current situation, the key is the impact on confidence (both business and consumer), commodities, and the international flow of goods – as if the trade war wasn’t enough. 

From early Dec ‘02 to late-Apr ‘03 the Hang Seng declined nearly -20%, and the S&P 500 reached as far off as -17% – although eventually recovering as dip-buying appetite emerged (S&P 500 began the month of January 2003 trading at 992.54). SARS was hardly the only variable guiding trading, but surely added a tailwind to selling pressure.

Investing Lesson from Past Epidemics: We Can’t Foretell the Future
Whether we study SARS, swine flu, or Ebola, the lesson for investors remain the same: The market has no memory. Don’t time the market! Don’t try to figure out when to get in and when to get out—you’d have to be right twice. Instead, figure out how much of your portfolio you’re comfortable investing in a balanced stock and bond portfolio over the long-term so you can capture the up markets and ride out the down markets. We can help you make this determination, as well as prepare you to stay invested during times of uncertainty.

Sadly, not enough “market experts” subscribe to this point of view. They’re still trying to predict the future. You’ve probably heard the saying, “The definition of insanity is doing the same thing over and over again and expecting a different result.” I’ve seen people make this same mistake for many decades.

We’ll never know when the best time to get into the market is because we can’t predict the future. And if you think about it, that makes sense. If the market’s doing its job, prices ought to be set at a level where you experience anxiety. It’s unrealistic to think the market would ever offer an obvious time to “get in.” If it did, there would be no risk and no reward.

So what should you do with the recent health hysteria? Keep in mind the most important investment lesson: Stay a long-term investor in a broadly diversified portfolio. Reduce your anxiety by accepting the market’s inevitable ups and downs.
The Key to Successful Investing
History has shown time and time again, the basics of successful investing begin with owning a broadly diversified investment portfolio, and then staying invested. Striving to time the market is extremely difficult, particularly when good days and bad days tend to be very clustered together. In fact, over the past 20 years, six of the ten best days occurred within two weeks of the ten worst days. The best approach during this period was to ignore the noise.

Financial markets are inherently forward looking, and the reality of the situation is that although 2020 is now underway, you cannot invest with 20-20 hindsight. Some things in the coming year will go right, while others will go wrong; the key is to own a broadly diversified portfolio that can absorb the markets twists and turns.

By their very nature, headline related market corrections will test patience and trick emotions, tearing the most stalwart investment scheme and shredding it to ribbons. Stay diversified. Stay invested. Call us if you have questions.

Have a great weekend!

Source: Efficient Advisors

Golf Tip of the Week

Mixing Golf and Business

Business and golf can mix well – in fact, they often do. If you are inviting clients or customers over to a course for a round (or vice versa), remember that golf is not only a test of skill, but also a measure of character. Playing partners will want to see you at your best, and you should certainly fulfill their expectations.

Some golfers get very emotional, even angry, during a round. Your customers or clients may be, but you shouldn’t. Be affirmative, encouraging, pleasant; if the talk turns to business, it should turn to business naturally. Refrain from issuing swing tips or putting pointers. If you can dress in an understated and color-coordinated way, great. Keep the same pace as those golfing with you, and avoid slow play.

Tip adapted from i

Recipe of the Week

Salmon Teriyaki

[2-4 servings]


  • 2 Tbsp. soy sauce
  • ¼ cup water
  • 1½ Tbsp. brown sugar
  • 1 tsp. garlic, minced
  • 1 tsp. ginger, minced
  • 2 tsp. clover honey
  • ½ tsp. toasted sesame oil
  • 2 tsp. cornstarch
  • 4 salmon fillets
  • Salt and pepper, to taste
  • 1 Tbsp. vegetable oil
  • 1½ Tbsp. sesame seeds
  • 1½ Tbsp. green onions


  1. Mix soy sauce, water, brown sugar, garlic, ginger, clover honey, and toasted sesame oil in a pot over medium-high heat. Keep stirring until the brown sugar dissolves.
  2. Bring to boil over high heat.
  3. Add 1 Tbsp. of cold water to cornstarch and stir until dissolved. Pour into sauce.
  4. Boil mixture for 1 to 2 minutes and set aside.
  5. Season salmon with salt and pepper.
  6. Oil skillet with vegetable oil.
  7. Sear salmon over high heat, skin side up, for five minutes or until achieving a golden crust.
  8. Turn over and cook the other side for five minutes or until fully cooked.
  9. Drizzle sauce over salmon and sprinkle with sesame seeds and green onions.

Recipe adapted from DinnerattheZoo.comii

Health Tip of the Week

Keeping Your Heart Rate Up (When Temperatures are Down)

Colder weather can steal our motivation to leave the warmth of our homes unless we have to. But your workouts don’t need to stop during the winter. Here are a few ways you can feel the burn indoors, while Mother Nature keeps it cool outside.

  • Hop to it with a rebounder (a mini trampoline) or a jump rope. If you have neither, fake it by keeping your hands to your sides and rotate them to mimic the exercise sans equipment.
  • Find a YouTube video or other streaming guided workout. Can’t squeeze in a full half hour at once? Pause it and return when you’re ready.
  • If you can afford it, invest in a piece of workout equipment you know you’ll use. If you run or hike, consider a treadmill with an adjustable incline. Like to ride your bike? Think about getting a stationary one.

There are lots of ways to stay fit while winter rages on outside. But don’t forget to always make sure to discuss any medical concerns with your health care provider before beginning any fitness routine; the information provided is not a substitute for medical advice.

Tip adapted from RealSimple.comiii

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The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this commentary is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. All investments carry a certain risk, and there is no assurance that an investment will provide positive performance over any period of time. An investor may experience loss of principal. Investment decisions should always be made based on the investor’s specific financial needs and objectives, goals, time horizon, and risk tolerance. The asset classes and/or investment strategies described may not be suitable for all investors and investors should consult with an investment advisor to determine the appropriate investment strategy. Indices are unmanaged and their returns assume reinvestment of dividends and do not reflect any fees or expenses. It is not possible to invest directly in an index. Information obtained from third party sources are believed to be reliable but not guaranteed. All opinions and views constitute EA’s judgments as of the date of writing and are subject to change at any time without notice.

The articles and opinions expressed in this newsletter were gathered from a variety of sources, but are reviewed by Ballentine Capital Advisors prior to its dissemination. All sources are believed to be reliable but do not constitute specific investment advice. In all cases, please contact your investment professional before making any investment choices.

Securities through Triad Advisors, LLC, Member FINRA/SIPC. Advisory services through Ballentine Capital Advisors, Inc. Triad Advisors and Ballentine Capital Advisors are not affiliated entities.


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