As the spread of the coronavirus continues to grab headlines, the uncertainty of financial markets leaves investors looking for answers.  Virginia Tech’s Derek Klock encourages people not to make rash decisions in the middle of a panicky market.

“Once markets begin gyrating around certain events investors should have faith that their past decisions were prudent and correct and let the markets work through the issues at hand,” said Klock.  “I have always tried to teach clients that the time to make adjustments is when they don't really seem necessary.”

[More: Find additional Virginia Tech expertise related to COVID-19 here.]

Klock, a professor of practice of finance in the Virginia Tech Pamplin College of Business, says it’s safe to assume if the coronavirus outbreak worsens, the markets could as well.

“Absolutely.  Past events like SARS, MERS and Zika all created some pain and chaos in the markets. In both 2003 and 2015 markets swooned about 13% and then quickly recovered losses as the world realized that the financial impact of the novel viruses was amounting to no more than a bad flu season.  If this novel virus turns out the same way then markets should recover about the same way.  But only hindsight will be 20/20.”

Additionally, Klock advises against investing in companies that are working on experimental COVID-19 vaccines.

“I don’t think that people should ever chase fads. They should construct a long-term asset allocation that meets their financial goals and works within their risk capacity and tolerance.  If investing in health sciences was originally part of their investing philosophy, great, but if not there was probably a good reason it was avoided.”

Derek Klock’s background

Expertise featured in the Roanoke Times

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