The Coronavirus Has Become A Market Obsession

No matter what a company does right now, the coronavirus seems to be the only thing that matters to investors to the point where we ignore good news

There is a very niche group of people around the world who find it fascinating to track the movement of aircraft using either apps or physically going to airports. This is known as plane spotting. Likewise, there are train-spotters, ship-spotters, and anything else you can think of. In fact, the term for someone who does this is ‘trainspotter’, and is defined as “a person who obsessively studies the minutiae of any minority interest or specialized hobby.”

Working at MyWallSt, one could define us writers as ‘trainspotters’, as we spend all day looking at a niche subject: the stock market. We follow its numbers and stories and are fascinated by all its little nuances. Now, however, the coronavirus has become blended in with this. Everywhere we look, whether it’s a story about Apple (NASDAQ: AAPL), Tesla (NASDAQ: TSLA), Beyond Meat (NASDAQ: BYND), or Virgin Galactic (NYSE: SPCE), the coronavirus is tied in with all of them, and it’s turning into an obsession. 

Monday’s recovery was short-lived

When I woke up on Tuesday morning, the sun was shining, birds were singing, and the market was looking healthy for the first time in what felt like an age. Yesterday, I even wrote about whether it was too late to buy the dip in the market

How naive I was. 

The Dow (INDEXDJX: .DJI) had risen more than 5%, the S&P 500 (NYSEARCA: VOO) 4.6%, and the Nasdaq (INDEXNASDAQ: .IXIC) 4.5%, as fears over the coronavirus’s impact on the economy abated somewhat. Monday had been a good day, but Tuesday was not. 

As the Dow slid a further 700 points on Tuesday, the Federal Reserve was forced to make an emergency 50 point rate cut and warned that the coronavirus “poses evolving risks to economic activity”. Companies that had made strong recoveries on Monday, such as Microsoft (NASDAQ: MSFT) and Starbucks (NASDAQ: SBUX), suddenly had those gains washed away on Tuesday. 

The Fed’s emergency procedures were not enough to reassure investors, and as the death toll from the coronavirus rises, so too does the mass panic. 

The problem with panic investing

Look, if the stock market was easy to predict, then we’d all be rich. At the best of times, it is a fickle creature, but throw into the mix a potential global pandemic which brings the world’s second-largest economy to a standstill and it’s a recipe for disaster. 

Add to this the panicked media headlines which pop up, essentially making you feel like the world is ending, and people go into mass hysteria. In the U.S., at the time of writing, 9 people have tragically died from the coronavirus. This coincides with retailers such as Costco (NASDAQ: COST), Walmart (NYSE: WMT), and Target (NYSE: TGT) all reporting shortages of stock as people begin to panic buy. 

Investors are no different. News headlines cropping up in the past week essentially equate to one hysteria-inducing headlining message: “THE STOCK MARKET IS CRASHING”. 

Investors began selling off shares in a panic unnecessarily, much like shoppers stock up with supplies they likely don’t need, and in most cases, either way, the consumer is losing money. 

We’re ignoring other news

I read an article this morning about Beyond Meat and it’s China plans, which we wrote about recently: Beyond Meat plans to enter the Chinese market. This is a big move from a company that has just partnered with Starbucks, and extended deals with McDonald’s (NYSE: MCD) and Dunkin Brands (NASDAQ: DNKN). The plant-based meat company also announced plans to gauge prices around the world and revise its strategy in a move to bring in more customers. 

10% of the article focused on Beyond Meat’s plans, while the other 90% was the same rehashed concern-piece about the coronavirus. Yes, there are valid concerns about China at the moment, but that was not the only thing Beyond Meat discussed. It seems like anything a company does is doomed to be overshadowed by fear of contagion. 

It’s the same line of thinking that is becoming prevalent among the masses that if someone is ill right now, it is almost certainly coronavirus. The other diseases didn’t go on vacation just because the coronavirus is in town. Likewise, businesses are still running in the background. Amazon (NASDAQ: AMZN) hasn’t shut down its operations because one of its employees has the coronavirus, and neither has anybody else. 

A unique buying opportunity

As I mentioned in my article yesterday, many investors are missing the upside to the market’s current funk, which is the unique opportunity to buy stock at a discounted price.

Google’s (NASDAQ: GOOG)(NASDAQ: GOOGL) share price fell nearly 4% yesterday off the back of its decision to cancel its annual developer conference, Google I/O, amid coronavirus fears. So what? I’m not going to complain as Google is suddenly a lot cheaper now than it was on Monday, despite it still being the same megabrand investment that rarely lets investors down, and has risen more than 130% in the past 5 years. 

The same can be said for a number of stocks, including Facebook (NASDAQ: FB), which fell 5% again on Tuesday. 
It looks like the coronavirus will continue to wreak havoc on the market for some time, but like most pandemic outbreaks in recent memory, including SARS, it could be shortlived. Whether it leads to the next recession remains to be seen, but in the meantime, the world will keep on turning, companies will go back to their day-to-day, and long-term investors should not fret over temporary dips in the market.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.