To say the markets are becoming volatile would be an understatement. The coronavirus has spread from being a regional issue to a potential global pandemic. New cases continue to move across the globe. Today, patients of the coronavirus can be found on every continent except Antarctica with the number totaling more than 90,000. As the outbreak continues to gain speed, worries about the global economy are starting to take shape.

Naturally, traders have begun to sell stocks en masse on the bad news.

With the markets heavily down in such a short amount of time, it’s easy to get worried and panic. However, the long-term outlook remains strong. History shows that even events like the viral outbreak are often short-lived. For those choosing mutual funds to build their portfolios staying on the path could be a wise decision.

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First reported at the end of December in the metropolis of Wuhan, China, the Covid-19 virus has taken on a life of its own in recent weeks. Thanks to the fact that the virus is particularly virulent in transmission, it has quickly spread around the globe. Cases have been reported across Asia, the Middle East, Europe and now the United States.

The worst part is that the virus continues to spread. Global and national health organizations have now warned about it spreading into new territories. At the same time, various analysts and world economic groups – such as the IMF and OECD – have begun to ratchet down their expectations for global growth for the year. Investment bank Goldman Sachs even went as far as to say that U.S. companies will generate no earnings growth in 2020 because of the economic threats posed by the virus.

To that end, traders have begun panicking and selling stocks across the board. In a single week, the major averages witnessed their biggest weekly drop since the Great Depression and have now entered official correction territory by sinking more than 10% from recent highs.

For mutual fund investors checking their brokerage statements or logging onto their accounts, this hefty drop is a major cause for concern. According to Morningstar, some of the largest funds have sustained major losses. For example, *Vanguard Total Stock Market (VITSX) dipped more than 11.6% last week, while *Fidelity Value Fund (FDVLX) lost more than 13.4%.

The question is: What will come next and should we really be panicking about these losses in the long run?

Given the losses, it’s easy to think about throwing in the towel, selling heavily and, basically, giving up. However, that clearly isn’t the right choice for anyone. And it only takes one chart to illustrate that point. What you’re looking at is the 100-year history of the Dow Jones Industrial Average.

As you can see, there are a few major dips along that line – including the Great Depression, recessions and the financial crisis. Nonetheless, the long-term trend of the market continues to be higher. Mutual funds, by their nature, are designed to be long-term holdings, and they have captured the general trend of the market throughout their history.

Digging further into the panic, you can see how quickly the markets can recover from such events. According to Goldman Sachs, there have been 26 market corrections since World War II. Average market declines have been just 13.7%, and it took about four months to hit that point. However, they tend to rebound rather quickly. According to the data, they hit their prior highs in around four months as well.

Even if the markets turn bearish – a drop of 20% or more – they are still expected to rebound over the longer term. Again, according to Goldman Sachs, there have been 12 bear markets since World War II, and they have averaged a decline of 32.5%. However, within two years, they recovered and pushed through to new highs.

The point is that the markets can and do recover from terrible short-term stressors and corrections.

For mutual fund investors, the lesson about the above data and chart is simply to ignore the noise and stick to your plan. Over long stretches, the markets have continued to grow and build wealth. And that should hold true going forward. And if it doesn’t, we have bigger things to worry about.

The key to this long-term view is making sure you’re diversified and follow an allocation you feel comfortable with. For example, bond mutual funds have held up well over the last week. Morningstar notes that Vanguard Long-Term Treasury (VUSTX ) actually gained 4.9% during last week’s sell-off. This highlights the role bonds can play in a portfolio to reduce losses. If you’re sweating bullets over the recent losses in the market, there’s a good chance you’re taking too much risk with your portfolio. Adding more bond allocation or switching from high-growth stocks to more value/dividend-paying ones makes sense. And that can be done via mutual funds. Meanwhile, having some cash holdings to take advantage of opportunities or to provide a spending buffer makes plenty of sense for many investors.

In the end, there’s no reason to change course even for an event such as the coronavirus. The short term will be rocky, but looking forward, things should normalize.

The coronavirus issue is starting to get serious – with rising deaths, economic issues and other problems. However, investors may still want to stay the course.

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