This is your lane for heightened precautions, safety measures, and so on. In the other lane, I think you maintain a positive, long-term outlook on how the economy and market are likely to stage a full recovery, with asset prices swinging back to new highs perhaps even by the end of the year.But in my view, it’s views like this that separate the smart money from the not-so-smart money over time. The fact that volatility tends to strike in scary clusters makes this kind of long-term thinking very difficult for many investors.

The iconic American company, General Electric, cut its workforce by 78,000 in 2019, bringing its total number of employees back to levels not seen since 1951. As General Electric slashed jobs and made efforts to cut costs, companies within the services sector went on a hiring spree – the healthcare sector added 361,000 jobs over the last 12 months, transportation and warehousing added 106,000, leisure and hospitality added 288,000 jobs, and professional and business services added 390,000. This anecdote for the 21st Century economy is a display of the continued rotation of the economy from a manufacturing/industrial economy to a services and consumption based economy.In my view, investors should be posturing over time for this evolution to continue apace, with no looking back.

But the tone changed this week, as the S&P 500 posted sharp declines early in the week as confirmed cases grew sharply across the world – particularly in developed economies like South Korea, Japan, Italy, and even here in the US. While equities sold off sharply, the yield on the 10-year US Treasury fell to a record low and oil prices dropped below $50 a barrel – all signs of growing investor concern over demand and economic growth in the coming months and quarters. In my view, volatility is likely to persist as investor attention is decisively shifted away from fundamentals (revenues and earnings) and towards the unknown (headlines).In short, however, I also think the fear of the coronavirus as a global pandemic is arguably greater, for now, than the actual economic impact it is likely to have.