Monday morning was a wakeup call for advisors and investors alike. As of this writing, FAANG stocks are down 4%, Exxon and Chevron are plunging to a 52-week low, and the Coronavirus has spread to the Middle East and Europe. That’s a rough start to the week. I had a full call schedule coming into the day, but the sound of silence is now deafening in my small corner of reality. Should I head downstairs to the bunker? Perhaps put my medical mask on and go stock up on canned goods and bottled water at the supermarket? If I continue to watch the news feeds I might be driven to both.
Fear is a paralyzing emotion. Most of the world, including the folks here in the US, live in fear of an imminent disaster of one kind or another. Nuclear war. A terrorist attack. The Big Flu. Recent developments lead many to believe the Bug has finally come and we’re about to fall prey to a malicious pandemic. Remember the impact map in the movie “Outbreak?”
Okay. It was a 1995 film and I’m old enough to remember it. I also recall when building a fallout shelter was a “prudent idea” and gas lines in the 1970’s (when gas was under $1 a gallon) caused mass hysteria. In nearly six decades on this earth, I’ve experienced war, terrorism, disease, and the dawn of a new Millennium that brought out the best and worst in people. I’m still standing and so are are you, so how about we relax and reflect on some things we can be hopeful about?
The Stock Market is Not Crashing
If you listen to Jim Cramer on Mad Money, it’s likely that you’re seeing the end of the world right now. There are few better than Jim when it comes to predicting financial apocalypse, but even the money mad man tried to instill a little hope into today’s events. “We will get through this,” he said. “I know i have been very negative about many stocks. I still can’t be that positive given that we have been very successful keeping travelers from China out of the U.S.”
That may not sound positive to you, but for Jim its positively effusive. The White House was (not surprisingly) more positive. A spokesperson was quoted on CNBC this afternoon saying, “Our initial reaction is that the Dow is still above 28k and nobody thought it would even get that high. We understand that the market is reacting to the news of the day, as it should, but the actual economy itself is very strong.”
Your Net Worth didn’t Change Much Today
Building wealth is a marathon, not a sprint. I just checked my ETF portfolio and it’s down slightly today, but overall it’s still up. My Roth is showing the same trend. The FAANG stocks hit me a little hard, but I’m fairly certain that Facebook, Apple, and Amazon are going to rebound just fine. My friends in Houston are struggling a bit because their clients are invested heavy in petroleum stocks, but is selling right now a great idea? I’d be more inclined to buy as oil stock goes down. Let’s see if the market rebounds in that area later today or tomorrow morning.
Bottom line is that your overall financial outlook is still just as bright as it was yesterday. Monday morning news reports often trigger this sort of market activity. The Dow will go down. People will panic and sell. Savvy investors will step in and buy. The world will continue to turn. You could spend the next few days gripped in fear over whether this will happen or you could simply look at market trends for the past hundred years. This day is not a bad day by historical standards.
How deadly is the Coronavirus?
It shouldn’t shock anyone that the numbers coming out of China fluctuate wildly depending upon the source, but the WHO is telling us that there are 77,262 confirmed cases of Coronavirus so far, with 2,595 deaths. That’s a mortality rate of 3.3%. In comparison, the flu hospitalized 120,000 people in the US last year and 6600 died, a mortality rate of 5.5%. Think about that for a moment if you’re worried about the Coronavirus. We’ve been living with a disease (influenza) that’s sickened 40 million people in this country since 2010, killing over 60,000.
“If it bleeds, it leads.” The news that broke this morning was the spread of Coronavirus into Iran (12 dead) and Italy (219 infected, 6 dead), its first documented appearance in those countries. The virus has also been detected in Japan, South Korea, and several other Asian nations. The number of cases in the United States? 53 infected, 0 deaths, 5 fully recovered. It’s early, and those numbers could grow, but it’s not time to panic yet, physically or financially.