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Stocks and pandemics (lessons from the Spanish Flu) Thumbnail

Stocks and pandemics (lessons from the Spanish Flu)

The COVID-19 pandemic is here, and we've found ourselves in a bear market

When markets fall as rapidly as they have over the last few weeks and the country is in a lockdown, it's reasonable to be worried about a situation that seems unprecedented.

Now is not the time to panic.

Because we've been here before.

The last outbreak to achieve pandemic status was the H1N1 Swine flu, which hit U.S. soil in April 2009. You might hardly remember it because markets were on a tear after bottoming out in March 2009, and the outbreak barely registered on investors.

But, some say that COVID-19 is nothing like recent epidemics. 

So let's take a look at one of history's worst pandemics:

The 1918 Spanish Flu. Nearly one-third of the world's population contracted the disease, and more than 50 million died in just 15 months.

Chart source: Source: MacroTrends, CDC, NIH, NBER

Historically, pandemics have struck the U.S. somewhat regularly over the last 100 years. Though outbreaks sometimes precipitated or accompanied market declines, stocks typically regained ground quickly as the epidemic subsided, and the economy returns to a new normal. 

The past can't predict the future, but it's a good reminder that pandemics are not the only driver of market movements. Economic fundamentals, business health, and future earnings all drive long-term market trends.

My goal isn't to downplay the seriousness of the outbreak. We are in the exponential growth period of the virus, and it's not going away soon. However, markets are running on fear and uncertainty more than rational assessments of the future.

What should you do right now?

  1. Don't buy or sell based on headlines. There's a lot of fear, speculation, and uncertainty feeding market volatility.
  2. Focus on staying healthy and taking sensible precautions to keep yourself and your family safe, especially if you have loved ones who are at higher risk of complications from the virus.
  3. Show the people around you some extra kindness in these days of anxiety. Let's be grateful for the medical professionals on the front lines and the hard-working folks keeping stores stocked.
  4. Remember that we as a nation have been here before, and we have the resources we need to get through this.

Seeking Professional Advice

When markets fall off a cliff, and economic upheaval is on the horizon, professional advice is one of the best tools you can have to cut through the noise and make rational decisions.

Additionally, if you would like to discuss your financial situation or investment strategy with a CFP®, please feel free to reach out by phone to (415) 275-1683 or by using this contact form

Thirty Mile Financial offers a complimentary 30 minutes consultation to help you assess your finances and to determine if you need to make changes to better plan the change global financial landscape.

Stay safe and best wishes to you and your family.