The coronavirus outbreak has thrown stock markets in turmoil. The market has seen some of the worst days it has had in more than a decade. As the markets closed, the President of the United States said that he was going to seek help from Congress. The coronavirus impact is profound, but as we protect our physical health, there are opportunities to protect your financial health.
The coronavirus stands poised to be one of the biggest threats that financial markets have faced in recent history. The coronavirus was detected first in December 2019. Since then, more than 110 countries have been affected, hundreds of thousands of people have been infected, and thousands of people have lost their lives and millions have lost their jobs.
The majority of confirmed cases, as of the time of this writing, were in China. Although China moved swiftly to contain the COVID-19 outbreak, the measures that they took restricted the movements of millions of people. Business operations ground to a halt. Since China is the world’s second-largest economy, the effect was felt worldwide.
To make matters more challenging, economic powerhouses like the United States, Europe, Spain, Italy, and France, have also been hard hit. In response, they have also taken drastic measures to limit the movement of people, grinding the economy to a halt.
What has affected the economy most is not the number of cases of COVID-19 that have been seen. Instead, it is the disruption of economies caused by containment measures. The coronavirus impact of all of this economically has been:
• Downgrades in economic forecasts
• Slowdown in manufacturing activity
• Services contraction, affecting restaurants, hotels, aviation, and retailers
• Declining oil prices
• Stock market route seeing a decrease in stock prices in most major markets
• Lower bond yields
The COVID-19 virus has created a bear market. The value of stocks have plummeted by at least 20 percent. While this may not be the best news for investors who need to sell stocks in order to get cash over the next few weeks, for those who have cash, this could present a solid buying opportunity.
However, as with all things, caution is needed. Over the next few weeks or months, life around the world will be far from normal. People may find themselves breaking in to their emergency fund just to stay afloat. However, if you are the type of person who has money set aside for three to six months and you have extra cash in addition to your emergency fund, now is an excellent time to consider spending it on stocks.
For all of those making money trading, a word of caution is to not expect a quick return on the money. The long-term coronavirus impact of COVID-19 on the economy is still unknown. Whether or not there will be a recession can only be speculated about. Individuals who still are able to earn money by going to work should strive to bolster up their emergency fund. It’s still not clear what the future of the economy will be.
Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) Over the years, Warren Buffett and his team have purchased dozens of businesses in a number of sectors that contribute to Berkshire’s bottom line. Buffett himself has an investment profile that, as of the close of 2019, had 52 securities. Over the years, Buffett has led Berkshire to per share market value gains of 2,744,062 percent in just 55 years.
TJX Companies (NYSE:TJX) is the powerhouse behind Marshalls and T.J. Maxx. Maybe the idea of investing in retail seems counterproductive right now. However, TJX has the ability to purchase brand-name products and sell them at a reasonable price. Customers consistently go to stores owned by TJX when they want to purchase quality things on the cheap. Smart investors look at this retailer as being valued cheaply.
Of course, there are a number of factors to be considered when choosing what stocks to buy or whether to invest at all. What is true is that in the foreseeable future people who make smart investment decisions will be able to survive the coronavirus impact on the economy. They might even make a little extra money to boot.