FILE – A Toronto Stock Exchange ticker is seen at The Exchange Tower in Toronto on Thursday, August 18 2011. THE CANADIAN PRESS/Aaron Vincent Elkaim

Think before you buy or sell stocks amid COVID-19 market turmoil, B.C. professor urges

The stock market plunged and shot back up within 48 hours

Despite the drop in stock market prices Monday, one B.C. economist is saying this isn’t 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’t last long.

“Clearly, one way or another we’re going to get a handle on that virus,” Pavlov said.

“The world economy was doing quite well before the virus and I expect whatever factors were playing into that will kick in again after.”

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.

VIDEO: B.C. records first COVID-19 death in Canada as province hits 32 cases

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.

“You do not sell when the market is down, like right now, [because] markets stand to recover,” 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’t have time to wait out fluctuations.

And it’s not all bad news for the market.

“Bonds have done incredibly well, so a balanced portfolio that is designed to serve you for the longterm… you will experience losses, but they won’t be too bad,” Pavlov said.

“If you hold on to it, things will very likely improve.”

But if people sell in a panic, Pavlov noted, that’s 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’s general financial situation.

“That is the kind of thing that can transform a relatively short term problem into something that can last for years,” Pavlov said, if people take out loans or mortgages counting on low interest rates or an upcoming boom in the stock market.

READ MORE: Stocks slide on Wall Street over coronavirus and oil crash

READ MORE: North American stock markets surge higher in early trading after crash on Monday

– With files from The Canadian Press


@katslepian

katya.slepian@bpdigital.ca

Like us on Facebook and follow us on Twitter.

Coronaviruseconomy

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Social media a blessing and a curse during time of crisis: B.C. communication expert

‘In moments of crisis, fear is very real and palpable,’ says SFU’s Peter Chow-White

COVID 19: Nuu-chah-nulth Tribal Council, other First Nations mobilize resources

Some Indigenous communities are enacting emergency measures to cope during pandemic

North Island College brings marine training to Port Alberni

Marine Training instructor Captain Harry Johnston joins NIC team

COVID-19: Isolation exemptions to frontline workers a danger to patients, say Island Health employees

Staff exempt from self-isolation upon return from international travel according to Island Health

An ongoing updated list of Alberni Valley events affected by COVID-19

Has your event been cancelled or postponed? Check here

Evening world update: U.S. restrictions extended 30 days; NY deaths near 1,000

Comprehensive world update, with the latest developments in the COVID-19 crisis

‘It’s up to us: Recently-returned B.C. couple urges Canadians to take COVID-19 seriously

Garrett Kucher and Tory Apostoliuk make it home after almost a week of lockdown in Spain

‘Nothing concrete’: Tenants, landlords lack details after B.C. unveils COVID-19 rental aid

Single mom in Golden says she’s already going to the food bank after being laid off

Canada will make sure masks sent by China meet quality standards: Trudeau

Chinese Embassy tweeted that China was sending 30,000 medical masks along with gowns, gloves and goggles

B.C. issues guidelines about distancing, reusable bags to grocery stores amid COVID-19

Hand sanitizer and markers to keep lines two metres are apart are needed, province says

No plans to call in military right now to enforce COVID-19 quarantine: Trudeau

Trudeau unveils $7.5M for Kids Help Phone, $9M for vulnerable seniors amid COVID-19

QUIZ: How much do you know about the Olympics?

Put your knowledge to the test with these 12 questions

Most Read