Financial health also impacted by coronavirus outbreak

With Novel Coronavirus (COVID-19) making headlines, alum Jeff Hays explains the impact of such factors on global markets.

Kim Chaudoin  |  03/05/2020

Over the last several weeks, Novel Coronavirus (COVID-19) has made headlines around the globe as the virus has impacted a growing number of countries. 

In addition to the obvious health threat of individuals contracting the illness, COVID-19 is having an impact on the global stock market and in US trading.  

According to the New York Times, the global stock market slid for a sixth consecutive day on Thursday, Feb. 28, as the S&P 500 index tumbled to its worst loss in nearly a decade as investors around the world became concerned about the impact the coronavirus outbreak is having on supply chain, scarcity and workforce interruption among other global economic concerns.

Just a week earlier, the S&P 500, reached a record high and the Dow Jones Industrial Average set records topping 30,000 for the first time. The drop last week erased over $6 trillion in market value in just five days according to BusinessInsider.com.

Investment veteran Jeff Hays, president of Arlington Family Offices in Nashville, explains the fluctuation as a normal part of the ebb-and-flow of markets.

“When major events happen in the world such as the current outbreak of coronavirus,  presidential elections, terrorism and natural disasters to name a few it is not uncommon for the markets to experience a period of increased volatility,” said Hays (’94), who is pursuing a Master of Business Administration program in Lipscomb’s College of Business. “For the stock market, the negative reaction to the coronavirus outbreak is less about the health risk and more about the economic ramifications of the virus. When China, the world’s main supplier of goods is closed for business for a couple of weeks, it is going to have a negative impact on the economy. The potential for the shock to the economy and markets becomes greater as the fear of the virus negatively influences the travel habits and spending decisions of the global consumer”.   

Hays explains that with markets reaching record highs in early February, conditions were ripe for an adjustment. 

“Before the downturn, the stock market was priced for perfection. Over ten years into a bull market as we found ourselves, investors tend to get more speculative, and this had driven markets to historic levels” he says. “What converged last week was a market that was expensive and a fear that global economic growth could no longer support these lofty valuations because of the impact of the coronavirus. That was the first domino to fall for the market to begin a correction.”

A stock index is often considered to be in a period of correction when it falls by more than 10 percent and returns prices to their longer-term trends. But it is a normal part of the cyclical nature of markets, Hays says. 

“If you look at stock market history, we see that this is one of the fastest corrections ever,” he admits. “But investing in markets is a long-term commitment. Markets weather ups and downs like we have experienced over the last few weeks. It is important for individuals not to panic and make emotional decisions but to take the long view of investing. I encourage people to look seven to 10 years on the horizon and to wait out periods of adjustment like this.”

Hays serves selected clients and heads the Nashville team of Birmingham-based Arlington, a leading multi-client family office providing highly-specialized guidance and services to a select portfolio of 52 families located in the United States, Canada, and Europe.

With a financial career spanning nearly 25 years, Hays brings a depth of insight and experience to Arlington. In 2001, he partnered with family members to launch Hays Advisory, an institutional research and financial management firm. He led a significant expansion there, achieving more than $2 billion in assets under management. In 2014, Hays was a founder of Cypress Capital, a firm designed to help high-net-worth investors achieve their financial goals. In 2017, he launched the inaugural Nashville Group of TIGER 21, the premier peer membership organization for high-net-worth wealth creators and preservers that helps them to navigate the challenges and opportunities that success creates. 

For more information about Lipscomb’s College of Business, visit www.lipscomb.edu/business.