The Coronavirus has taken the world by storm and has infected tens of thousands of people and caused millions to be quarantined. It is a very real threat and currently while I am writing this, there are 82 confirmed cases in Westchester County and it has caused the closure of many schools in our area. Along with the health crisis, Coronavirus has dramatically affected the stock market.
This all comes from one root issue, manufacturing. China is the center of manufacturing in the world and many of the world’s largest companies outsource their manufacturing and production to the country because of the cheap labor that it offers. Some of these companies include Apple and Microsoft, both companies with market caps over one trillion dollars. Coronavirus originated in Wuhan, China and spread across the entire country. What this has done is scared everyone and so no one is going to work at the factories. This leads to no goods being produced.
This and the fact that the media has been continually talking about the coronavirus has really spooked stockholders and so everyone is selling off their stocks because the future looks gloomy and many companies may not even break even this year. This massive sell off has completely driven down the stock market and the DOW has dropped almost 4000 points in the last month. The value of a share at companies like Sprint and Goldman Sachs have gone down over 10%.
Despite this, there are companies whose stock price has rebounded like Walmart whose stock dipped but recovered because so many people are buying stuff from them in preparation for the arrival of Coronavirus in their area. The market did rally at the start of last week because so many people bought shares in companies at a really cheap price and because of the Super Tuesday results in the Democratic Primaries, but it went down again by the end of the week.
I am looking into index funds and stocks of large and established companies. This is because this is an opportunity to buy shares at a really cheap price and these companies have an extremely low chance of going out of business because of an event like this. Another strategy would be looking into options to shield oneself from a significant loss that could unexpectedly happen especially since Coronavirus continues to make headlines. Shorting stocks and buying commodities like oil are another option since its price has been cut in half in the last six months.