The S&P500 was down 8.8% for the week, after two trading halts last week due to announcements regarding the coronavirus spreads and actions following the spread. Some cities in the US has banned large gatherings and the NBA had suspended its games. In Washington, President Trump restricted travel from Europe after 1200 confirmed cases of the virus.
The entire world is in complete panic and the market had followed. These are very difficult times to hold equities for the long term, the S&P500 had dropped more than 26% and the bottom is not in sight, volatility is high and the media is obsessed about this virus.
In the middle of all of this, a seasoned trade must keep calm, not let emotions trade and if it’s too much.
Don’t trade! At all!
It is the best decision for your portfolio.
One thing we do know – this WIIL blow over and the world will return to normal.
The markets will return to normal BEFORE the rest of the world because of their nature, as markets are forward-looking. Once all the uncertainty is priced in, the markets will reevaluate and regain normalcy.
Let’s do the math for a minute
Coronavirus started in China about 6 weeks ago, now it’s slowing down significantly, so the virus can be beaten using Chinese discipline in about 6 weeks. Since the western hemisphere is not that disciplined, we may take 9-12 weeks to get to the same results as China did. Let’s start the count from March 1st, that means we should see lower numbers by May since the marks is forward-looking, it will not wait for the numbers to actually decrease, it will start to recover sooner – that’s April.
We have another 2-3 weeks of market panic and then the market will start to shift back to normal. Mind you, it’s going to be in the middle of the pandemic crisis, but the market, as we said, is forward-looking, bearish territory or not.