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COVID-19: it’s a virus not Stage IV cancer

The markets were spooked today as the Wuhan coronavirus COVID-19 continues to spread outside of China.

The S&P 500 dropped 3.35%, exceeding the initial virus selloff on 1/31/2020.  Could things get worse?  ASBOLUTELY !!! 

But I remain optimistic and see this as another opportunity to position my portfolio for long term profit, not short term panic.   As such, today I increased my position in the US broad market using Schwab’s ETF SCHB.

Some things to consider-

  • S&P 500 is only off its record high by ~5%.
  • The S&P 500 is hovering around its 15 week moving average, which so far is a sign of support.
  • Today’s VIX jumped above 26.  In the past two years it’s only exceeded that value twice when it reached ~30, and that was during the market bottoms of Feb ’18 & Dec ’18.
  • Chinese markets are less volatile than US.  China Tech Sector ETF CQQQ was only down 2.10% and China KFC/PizzaHut (YUMC) was down 3.86%. 

The deaths caused by COVID-19 are a tragedy, but for now, they’re hardly a pandemic that will collapse the global economy.  The death toll in China is currently around 2,600…that’s in a population of over 1.3 billion.  How many of these people would have died anyway from seasonal influenza, pneumonia, or old age?  Remember, yesterday in the USA, about 100 people died in automobile accidents.  We live in a dangerous and uncertain world.

Keep things in perspective: COVID-19 will impact the economy, but it’s a virus, not Stage IV cancer.

What about all the missed work and quarantines?  Won’t that disrupt the global supply chain and squelch consumption?  Won’t corporate profits suffer?  If you’d like to know why I’m not worried, please listen to today’s podcast:  https://www.wealthsteading.com/308




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