How to Handle the Toll Coronavirus is Taking on Stock Markets

• Author: Michael Bordonada
• Posted: 2024-09-30

Though Coronavirus is a new phenomenon, there still is not a cure for it at time of writing. Without a cure or preventive vaccine, people are getting worried and dumping their stocks. There may be some validity to this approach if companies will permanently close due to the virus. However, the issue will more than likely be resolved soon. Here's what to do in the meantime with your stock market investment accounts.

Don't Panic

Yes, we are seeing sudden downticks in every major market, such as the S&P 500, Dow Jones, and Nasdaq. Your first instinct may just be to sell that stock off as quickly as possible. However, you would be facing a major loss. Coronavirus is feared by many because it's a new virus, but these fears are blown out of proportion, largely due to excessive media coverage and a lack of understanding by most people.

Look at the Facts

It's easy to buy into the hype. Coronavirus is trending all over social media, being covered on every news outlet, and even being predicted by some as a future global pandemic. In Wuhan, China, there is a tragic death toll hovering around 2,600 lives lost at the moment. Other countries with a significant count of people ill with Coronavirus are South Korea, Italy, and Iran. Notably, none of these are near North America, and Italy is on the fringe of Europe.

However, Coronavirus is not spreading around the world like the plague, contrary to what you may be led to believe by news outlets. While there have been reports of it being introduced in parts of Europe and the United States, these remain isolated incidents and are largely quarantined. Thousands of deaths may seem like a staggering number of lives to lose. However, between 2018 and 2019, almost 35,000 people died from the traditional flu in the United States alone.

Strategize

It's very clear that it's a buyer's market all around. Some people gave into their fears and sold their stocks. Sadly, some people are continuing to sell their stocks at record lows. Unless you are days away from retirement, this is not a great plan. First, these people will likely come back to the markets once the Coronavirus issue is eradicated. They'll need to buy stocks again, but at much higher prices than they sold them.

This means that, even though it may not seem intuitive, this is an unprecedented market opportunity. Though nobody can predict where exactly stocks will bottom out, they are already at such low prices that it's unlikely to not make a return on investment. The reason the people who sell their stocks now will need to pay much more to get them back is because investors are capitalizing on this opportunity. You could easily be one of these investors by simply making a retirement plan contribution or re-allocating money in a retirement account.

Still Be Cautious

Note that while most stocks are likely to shoot back up, it's quite possible that some based on trades that rely on China will be permanently dropped, or set at a very low rate for many years to come. What we're witnessing now is very similar to what triggered the Great Depression. Remember, the nature of the stock market is that it's volatile and changes daily based on many factors.

Unless we learn from history, it will always repeat itself. One huge takeaway from 1929 was that while prudent investing is imperative, selling off stock in a panic can be disastrous.

Closing Thoughts

It's important to remember that there's no "one size fits all" advice when it comes to investing. For example, younger people with decades to go can afford much more risk than someone looking to retire in a few years. Though it's likely these stocks will spike back up, there's no telling exactly when, and there's no guarantee that they will.

What makes one person's investment portfolio shoot up may make another person's portfolio offer a very bleak future. Since this is a very complicated situation, only a qualified CPA could advise you, personally, on whether it's a wise choice to purchase based on your retirement status and goals.