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Coronavirus: A Dose of Uncertainty and Risk

Coronavirus: A Dose of Uncertainty and Risk

February 10, 2020

The Coronavirus has brought about feelings of fear, uncertainty, and empathy from around the world.  What are the impacts to financial markets and your portfolio?
To an extent, risk can be assessed, measured, and managed.   Uncertainty is unpredictable, uncontrollable, and cannot be measured.  Through this lens, we see Coronavirus as uncertainty, not risk.  

Previous incidents such as SARS and Ebola provide examples.

          Graphs Courtesy of Camelot Portfolios

Like SARS and Ebola, what we have seen is an initial selloff followed by a rebound, suggesting that investors appear to believe that this will be relatively contained and short-lived. Further, the Chinese government injected significant stimulus and been very clear that it will continue to take such measures to support the economy.  

Charts Courtesy of Factset Research Systems