Stock market vs Coronavirus
The stock market is a very sensitive organism that reacts sharply to any changes in the world around it. The current coronavirus pandemic is no exception. The spread of the virus has had an acute effect on the positions of known assets. Infection forces countries to invest in healthcare, close borders and interrupt international relations. That is why serious companies from completely different fields experience a blow to the value of their shares. Investors go on the defensive and start investing in indestructible assets like gold and US Treasuries. Should I fear and leave the stock market? What are the forecasts for future stock trading? Today we will answer these and many other questions. Let’s get started.
What exactly is going on? We deal with the nuances
In fact, any global threat, be it a war or a serious epidemic, negatively affects the stock market. The fact is that states prioritize the protection of the population and the fight against infection, forgetting about economic progress. Investments in medicine exceed contributions to mining and trade, communications with trading partners almost completely cease. All this, of course, negatively affects the growth rate. Based on global indicators, due to the epidemic of the virus, global economic growth in the near future will decline from 2.4% to 2.2%. China suffers serious losses, as does the European region. In the Eurozone, economic development indicators amounted to 0.5% instead of the expected 0.9%. The situation also affected the United States. America felt a blow, the growth rate decreased from 1.8% to 1.7%.
During the week of the outbreak of the virus, when the infection got into Italy, world indices lost about 13% of the price. This is the worst economic downturn since 2011. That is why investors are afraid of the collapse of their own savings and go into the “defense”. Today, every stock player is trying to invest in American bonds (which, by the way, also fall) and fundamental resources, such as gold.
How to work in the market in difficult times?
First of all, you need to calm down and not make hasty decisions. Experienced traders do not recommend stopping trading and completely leaving the industry. In their opinion, as soon as the situation with COVID-19 returns to normal, the market will return to its previous positions and begin to make a profit.
At this stage, one should prepare for the worst. Since vaccine development is a long process, you need to save your money for an indefinite period of time. Professionals advise to distribute investment portfolios. Invest in gold, US Treasuries and other assets that are sure to not disappear from the market even in the worst situations.
Gold, by the way, has peaked since 2013, rising to $1,689.31 per troy ounce of metal (about 30grams). However, after active growth, a slight decline followed. The fact is that investors sold part of the savings in the precious metal in order to receive money for the purchase of other protective shares. This is another indicator that gold is one of the best options for current investments. This asset is believed to not disappear under the pressure of infection.
It is necessary to diversify risks, while not forgetting about your own benefit. As long as the stocks of large companies fall, they can be bought for nothing. It is logical that when the pandemic ends, prices begin to rise, and you can earn from dividends or the full sale of shares. Work carefully, do not believe the skeptics who urge to immediately sell all securities and leave the stock market. Everything will be alright.
Stock Market Covid 19. Summary. What to expect.
Now you know everything that should be understood during trading in such a difficult situation. Follow our recommendations. Strengthen your own investment portfolio, and then smoothly buy the fallen securities of well-known companies. This classic scheme will allow you to survive and earn in the most difficult and incomprehensible conditions. Thank you for your attention, good luck!