Well, I do not know about you but 2020 is already proving to be a noisy year thus far. We started of some with some geopolitical risks, then there was a bit more noise with the US-China trade deal, and just when things seemed to be heading back to normal a new threat has begun this week, The Corona-virus!!
We started the week with a bit of a downside, the Dow Jones Industrial Average was down almost 2% and so far this week we have seen global stocks falling as further concerns have continued to grow surrounding the overall economic impact of this outbreak.
Interestingly there are some very obvious similarities with the behavior of the stock market this week as compared to what experienced in 2003 with the break out of ‘Severe Acute Respiratory Syndrome (SARS), the Swine flu 2009 and in Ebola in 2014. Whilst these have not usually had a long lasting impacts on stocks, what these outbreaks does do, is remind us that the stock market has unforeseen risks we can never predict and that volatility can come out of thin air, no pun intended.
The question is, could Investors be just overreacting? If so, is this an opportunity to invest in good companies at a lower prices? Well I guess that is your decision to make. What will be interesting going forward is that anything the World He
alth Organisation has to say regarding further developments in China will very likely have an impact on stock market movements. I am sure companies such as Apple will have a very close eye on this seeing as it has a huge supply chain in china.
Quick Commentary (Authors Opinion)
As an investor in stocks, the last year (2019) has been amazing for the bulls. I mean, as a value investor you will struggle to find many good value stocks since valuations are so damn high. This week however we have seen a pull back and some say this was way overdue, I say this is probably not the last one for this year.