Despite the drop in stock market prices Monday, one B.C. economist is saying this isn鈥檛 the time to go all-in.
Andrey Pavlov, a finance professor at Simon Fraser University, said although COVID-19 has had a marked effect on world markets, it won鈥檛 last long.
鈥淐learly, one way or another we鈥檙e going to get a handle on that virus,鈥� Pavlov said.
鈥淭he world economy was doing quite well before the virus and I expect whatever factors were playing into that will kick in again after.鈥�
Stocks went into a steep slide Monday on Wall Street as a combination of coronavirus fears and a crash in oil prices spread alarm through the market, triggering the first automatic halt in trading in over two decades to let investors catch their breath. The Toronto Stock Exchange posted its biggest one-day loss since 1987, although it surged 400 points in early trading Tuesday.
The novel coronavirus, or COVID-19, has infected more than 80 people across Canada and killed one care home resident in B.C. Worldwide, there have been more than 100,000 COVID-19 cases, the majority of them in China, where the outbreak began.
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The drops spurred worries among people invested in the stock market, but Pavlov said the advice remains the same this time around as it does for any market plunge: wait it out.
鈥淵ou do not sell when the market is down, like right now, [because] markets stand to recover,鈥� Pavlov said.
He said most people invested in the stock market have at least a few years before they will need that money, while people staring down retirement should not be so heavily invested to begin with because they don鈥檛 have time to wait out fluctuations.
And it鈥檚 not all bad news for the market.
鈥淏onds have done incredibly well, so a balanced portfolio that is designed to serve you for the longterm鈥� you will experience losses, but they won鈥檛 be too bad,鈥� Pavlov said.
鈥淚f you hold on to it, things will very likely improve.鈥�
But if people sell in a panic, Pavlov noted, that鈥檚 what will do longterm harm to the market worldwide.
But while right now is not a bad time to buy, people relying on a payoff from buying more than they can afford right now could hurt both themselves, and the world鈥檚 general financial situation.
鈥淭hat is the kind of thing that can transform a relatively short term problem into something that can last for years,鈥� Pavlov said, if people take out loans or mortgages counting on low interest rates or an upcoming boom in the stock market.
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鈥� With files from The Canadian Press
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