Coronavirus Won’t Be the End of This Bull
Worried that the coronavirus will drag the stock market down into a painful correction?
After Monday, when the Dow Jones Industrial Average dropped by more than 500 points, some fear is certainly justified.
This isn’t the first time, however, that the stock market has had to deal with the threat of a deadly pandemic. In 2003, SARS, or severe acute respiratory syndrome, sent the stock market into a tailspin.
However, even if this pandemic follows a similar course, the global economy and the stock market are looking at just a temporary tumble:
- The coronavirus has so far been far less lethal than the SARS outbreak of 2003. According to the Chinese government, over 9,800 people have been infected and over 200 — mostly elderly — have died. The SARS virus in 2003 killed 774 people
- Stocks tumbled as the SARS virus spread and the S&P 500 dropped 10% from the January until March 2003 but ended up with a very strong 21% gain for the full year.
The same result — an initial drop followed by a double-digit rally — has played out time and time again. Remember the Ebola, avian flu, MERS and Zika epidemics?
How far the stock market falls will be tied to the severity of the virus, but the global scientific community has been very successful at limiting the human loss and that is why the stock market has been so resilient despite the mainstream media’s breathless hyperbole.
While there are no guarantees, I expect the stock market’s response to the coronavirus to be no different: a moderate drop followed by an impressive rally.
The worst mistake you could make is to flee the stock market and miss out on all the subsequent big gains.
My advice is to sit tight, buckle your seat belt and hold on for a profitable 2020.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch