Economy,  Life,  Stock Market

Coronavirus – Time to Panic?

March 5, 2020
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“Hey let’s have pasta tonight?” 

“Sure”.

And so off I went, like any good husband.

In search of pasta.

Lo and behold the sight that befell me at the shops:

Going, going, GONE.

CLEANED OUT.

Goodness, what is going on you ask?

It’s because we are in PANIC MODE people.

Coronavirus fever has well and truly hit.

Now, I posted a couple of weeks ago on it (read here, and here) and it’s time to do an update.

Because times have significantly changed since then.

I’ll preface the below with the statement that it is my opinion only. You can agree, you can disagree but I hope you get something out of it!

~~~

Coronavirus, How Bad Can It Get?

To this question, I have no idea.

If the WHO and the leading medical experts in their field cannot put forward an accurate timeline, what chance does someone who’s scientific knowledge never extended past high school have?

But I will say this.

There is ab-so-loot pandemonium and chaos going on in Australia right now.

You can’t walk a block without hearing a few conversations about Coronavirus.

The level of media attention and focus is unprecedented – with all the major news outlets bombarding us with updates constantly.

Image result for bombardment gif
How I feel sometimes… as a princess.

Whether it’s the number of rising cases, the number of countries infected, the number of deaths – it’s too much.

But most of us, we get affected by the media.

It’s a self-perpetuating cycle.

And to me this translates into a dedicated effort from politicians to take affirmative action.

Because in times of need and distress, we turn to the ones who are in charge for help, our government.

For the moment, I think the government is doing OK in its efforts to curtail the spread and manage the crisis.

Will Things Get Better?

Unknown, but if I was a betting man – I would put money on “yes”.

This is because I look at the origin of the pandemic, China.

China has undergone a phenomenal social quarantine effort of closing schools, shutting offices, forced staying-at-home etc. to try and prevent the spread of the virus.

And it’s worked.

The number of new cases continues to slow.

Unfortunately, this does not provide any relief for those many new countries where infection cases continue to rise.

However, the news from China is cause for optimism that this virus can be contained.

Also, the sheer number of people infected means that it is a priority for practically every government to either prevent the virus from spreading or finding a vaccine and cure.

My strong opinion is that a vaccine will be found eventually, because as I’ve mentioned, Coronavirus is now a political problem to be solved.

At What Cost?

Exactly! No one knows.

Well, here in Australia, it’s come at a cost of no toilet paper…

There’s still an 8 pack left! Grab IT.

But toilet paper aside, a significant cost of the Coronavirus is the cost to the global economy.

We’ve seen it recently with major markets dropping 10-15% in the space of a week.

Companies associated with travel and tourism in particular, have been crushed.

Why?

Because of the slow-down to global growth.

Most analysts are tipping recession. Or at least the potential for recession.

Personally, I think it’s because of the below main factors:

  • The Coronavirus has seemingly come out of nowhere (a Black Swan) and the unknown factor is what is scary, causing people to rush to the sidelines to “wait and see”.
  • After a decade long bull-run, a lot of investors are sitting on handy gains. So it doesn’t take much to book some profits and wait it out.
  • Correspondingly, growth companies exceeding their valuation multiples. It’s time to take a breather.
  • The rise of passive indexing and algorithmic trading (70% of total US volume) has amplified the velocity of these falls. Computers rushing to get out before other computers.

What To DO?

Who knows whether we’ll see recession or not.

We’ve seen the RBA cut rates this month, and the fed with an emergency cut.

But to be honest, rates are already so low, I feel this time, there’s diminishing marginal utility the lower rates go.

There’s more talk of Australia starting Quantitative Easing (RBA tries to buy itself out of a mess).

Whether that happens is mere speculation and conjecture at this point.

I think if (like me), you’ve been caught with the falling stock market knife – there’s not much you can do.

I mean, you would only sell if you can find something with higher returns, whether that’s in another stock, in cash, in property, in bitcoin or whatever.

And in order to do that, you need confidence that whatever you’re going into, will deliver those returns.

Do you?

What Are YOU Doing TheFrugalSamurai?

Licking my chops and grinning like a Cheshire Cat to be honest.

Image result for cheshire cat gif
Um, hopefully not like this acid-dropping cat.

Not that I’m a sucker for pain and like losing money (I’m down A LOT).

But because I think we’ll be seeing more and more VALUE.

I’ve often heard people comment that the stock market is a grocery store – and you’ve just walked in and found things are 10-15% off.

Point is though, not everything is 10-15%.

Some have been slashed 50% (or more), in a WEEK.

I’m adding more and more names to the spreadsheet titled “Coronavirus Stocks To Buy?” each passing day.

Mind you, that’s only because I’ve got a bit of spare cash lying around, so as an accumulator – it’s in my interest for the market to plummet, so I can scoop it ALL up, like the greedy, fat bastard I am.

“Looks in mirror and loosens belt buckle”.

Going Forward

My honest thought is that I think a vaccine will be found sooner or later, or at least a cure or some REMEDY to the Coronavirus.

There will be more pain in the short-term, and a lot more media attention – I now wash my hands more than I’ve ever washed them, they are pristine.

But if you had to ask me whether I’m worried?

Maybe I am ignorantly stubborn – but I would answer no.

There’s always been crises and disasters and unexpected events – human beings just preserve.

The ONLY thing which would really worry me is if this Coronavirus mutates into something else.

Like that Brad Pitt movie where he has to go to Jerusalem via South Korea and there’s a whole bunch of singing and oh won’t you chop my hand off please sir?

Yeah… that would have me panicking, forget stocks, forget investing, forget toilet paper – it’s guns, ammo, tinned food and bottled water thanks.

But for the moment, I’m still on the hunt for pasta.

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