A Coronavirus Pandemic Occured, But Are You Ready To Seize This Market Opportunity?
I will not go into further details as the Wuhan virus is quite viral recently on the internet. The mediocre investor encourages everyone to be prepared during this outbreak by taking all the safety precautions.
There were many cases of epidemics/pandemics that happened in history. For instance, Spanish influenza, Asian influenza, Hongkong influenza, or the most known epidemics that happened in 2003, the infamous severe acute respiratory syndrome (SARS). These outbreaks happened and miraculously the human population survived through all of these outbreaks. Therefore, it is quite positive to assume that the human population will be able to survive the Wuhan virus as well.
Other than epidemics/pandemics preparedness for survival at the present moment, the mediocre investor should look further beyond in the future - when the outbreak subsequently dies out. This brings us to the next question - How does the stock market react during these outbreaks and what can we do to seize any market opportunity if there is?
As shown above, the stock market will have a bearish movement (market doing bad) followed by a re-bounce (market normalizing) during a pandemic outbreak. This could be due to a drop in consumer confidence, leading to a drop in consumer spending, causing a decline in the stock market. If the market is doing badly, then why is there an opportunity presented? Even though these are historical data, however, we can have a rough gauge based on these data to predict what will happen to the market due to the Wuhan virus in the next few months (market decline followed by a re-bounce movement).
As stated by Warren Buffet, "In the business world, the rearview mirror is always clearer than the windshield". In other words, the past is always clearer than the future for an investor.
To conclude, the mediocre investor sees an opportunity in disguise to make full use of the war chest in building up our portfolio as most of the stocks with strong fundamentals will be undervalued (sold at a discounted price) during this period - Time to load up your stocks.
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