Coronavirus Driving People From The Stock Market

The coronavirus' stock market impact is immense. It is spooking stock markets. The Dow Jones Industrial Average (DJIA) shed 12% or over 3000 points over five days, February 24-28, the largest 5-day drop since the Great Recession. The DJIA recorded the biggest single day drop (1191) during that week on February 27.

China is a key player in companies' supply chain. That's why analysts fear firms in China won't deliver parts to companies like Apple and Walmart, which will cause these firms' results to suffer. The fear of the unknown is causing panic. Stock markets hate uncertainty, and this virus comes with an abundance of uncertainty: When will there be a vaccine? How will countries contain it, and so on?

Coronavirus' Stock Market Impact Could Linger

Nobody knows how long the coronavirus' stock market impact will last. But history shows us that stock markets over-react and then continue their upward Novelcorona.in . Today, the rapid proliferation of the virus increases fear, so people are over-reacting. We need to pause and not rush to the exit.

Markets recovered quickly from past viral outbreaks. Will the coronavirus' stock market impact lead to a realized capital loss to you? The market change, per se, does nothing. You lose funds only when you sell below market price. Some firms' results will suffer in the short-to-medium term because of insufficient inventory. Other companies will gain. Although we do not know the virus' severity, judging from past market responses, caution is the key response.

Are you a value investor with targeted companies in your portfolio? Examine your goals and stay the course unless you see changes in the firm's intrinsic value. Have you been speculating, looking to make a quick buck with a margin account? If so, you will have a challenge because banks will call your margin. That's the inherent risk when you use a margin account to speculate.

If you are not a speculator but a value investor, now could be the perfect time to identify value stocks and select those at bargain prices. There will be several. Whoever you are, be cautious, reject the herd mentality, and reflect on these matters: