Chart of the month: Recent stock price falls

  • 06 March 2020
  • 5 minutes

Recent stock price falls

The S&P 500 is a key index that tracks the performance of 500 of the largest publicly listed companies in the US. As the chart shows, there has been a sharp fall in the index over recent weeks caused by concern over the spread of the coronavirus COVID-19.

This has constituted a 10% drop which is referred to as a “correction”. Similar falls have been recorded in other indices across the world, including the FTSE 100 (though its movement has also been affected by changes in the value of the pound partly due to uncertainty over the Brexit outcome).

But the chart also shows why we are not panicking: the stock price fall, while unpleasant, brought the index down to the level it reached in autumn 2019.

We would not be surprised if there are further falls over coming weeks. However, we focus on the long-term investment horizon, that of 10 years or more. We believe that this gives us the best chance of constructing a sensible investment strategy and not being distracted by relatively short-term events.

Forecasts of future performance are not a reliable guide to actual results in the future; neither is past performance a reliable indicator of future results. The value of investments, and the income from them, may fall as well as rise and cannot be guaranteed and the investor might not get back their initial investment,

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