Posted in: Market NewsOp-ed
Published:
March 9, 2020 6:41 PM UTC

If Coronavirus Is ‘Just the Flu,’ Why Aren’t You Buying the Stock Market Plunge?

If you're confident enough to mock the coronavirus outbreak as a sensationalized flu, why aren't you buying the stock market's massive dip?

  • Social media is loaded with people who don’t take coronavirus seriously. They say it’s no worse than the common flu.
  • If that’s true, then the stock market crash doesn’t seem to be justified.
  • So why aren’t investors buying the dip?

We’ve all seen our “friends” on social media smugly mocking coronavirus and saying it’s just like the flu. The implication is that we shouldn’t worry about it – and the stock market definitely shouldn’t be crashing.

You’ve likely seen comments like these on Twitter and Facebook:

Source: Twitter

But if the coronavirus is just a sensationalized flu, why nobody is buying the stock market crash? Why isn’t the smart money buying this dip?

Wall Street Doesn’t Buy the ‘Just the Flu’ Narrative

People are used to the common flu, but not to the coronavirus. So when faced with something new and unknown, it’s not surprising that they’re clinging to a familiar illness as a reference point.

Since COVID-19 patients tend to have symptoms similar to those caused by the flu, it is natural to compare the coronavirus outbreak to the flu. It’s also a way to reassure people and not make them panic.

But the thing is, as coronavirus spreads all over the world, we know more and more about that virus. COVID-19 is NOT like the flu. The World Health Organization says it’s far more deadly.

Beyond its higher mortality rate, coronavirus is more contagious and makes people sicker than the common flu. So people who say that COVID-19 is like the common flu either don’t know what they’re talking about or are deliberately misleading the public.

But even this misinformation hasn’t been enough to prevent widespread concern.

Panic Is Causing A Stock Market Crash

We need look no further than the stock market to see that people are in full panic mode.

The Dow Jones, S&P 500, and the Nasdaq crashed so hard this morning that it triggered the market’s “circuit breaker,” which temporarily halted trading.

The S&P 500 is down 15% since the start of the year:

The S&P 500 has crashed by 15% in 2020. | Source: Yahoo Finance

Investors are selling their stocks aggressively to put their money into safe-haven assets, driven by fear and anxiety. The 10-year Treasury yield hit an all-time low of 0.318% on Monday.

The number of coronavirus cases is rising fast, and the situation seems to be out of control. Economists forecast a 30% risk of recession in the coming year and a 40% risk in the next two years.

With all this volatility and uncertainty festering in the markets, it takes nerves of steel to buy stocks.

Warren Buffett says to be greedy when others are fearful. When stock markets plunge sharply, it creates an opportunity to buy quality stocks at low prices.

The problem is that it’s hard to tell when the stock market has finally hit bottom.

Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com.

This article was edited by Josiah Wilmoth.

Stephanie Bedard-Chateauneuf @SBChateauneuf

Stephanie has been writing about stocks and financial markets for several years. Based in Canada, she has written for The Motley Fool and Seeking Alpha. She received an MBA in finance and worked for National Bank of Canada. Email: stephanie.chateauneuf@gmail.com

Show comments