Don't Blame the Coronavirus for this Recent Market Implosion

Want Safety? Play the Long Game

Written by Jeff Siegel
Posted February 26, 2020

As I write this, the Dow is down another 100 points or so.

Panic surrounding the spread of the coronavirus is being blamed. Although technically speaking, it’s not the virus itself that’s making your stocks tank. It’s the fact that the virus is resulting in a slowdown in manufacturing and retail sales, which in turn is affecting the market

I don’t think there are many folks in Wuhan right now looking to hit the mall to pick up some new jeans at the Gap or a can of fart spray at Spencer’s.

spencers

What I’m saying is that a virus alone cannot devalue stocks. But human behavior can. And when people are afraid to leave their homes, travel, shop, or even go to work, the market falls faster than granny panties at a Wayne Newton concert.

The bad news, aside from the obvious horrible things that come with any pandemic, is that many of my stocks are getting crushed.

The good news is that nearly all of these stocks are long-term investments. I plan to hold these for the next ten to twenty years. So I’m not particularly worried about this temporary slide. And as Warren Buffett recently pointed out, the 10-year or 20-year outlook for US business has not changed in the last 24 hour or 48 hours.

Truth is, eventually the spread of the coronavirus will peter out.

People will go back to work, steady manufacturing will resume, folks will start buying useless shit again, and most of these stocks will return to proper valuations. This is actually why I’m monitoring this outbreak, as well as the global markets in an effort to pounce when it looks like all this selling has plateaued.

This recent correction is definitely exposing a lot of opportunities for those with the stones to take advantage of them.

I also recently decided to pick up a few shares of Moderna (NASDAQ: MRNA), just a few days ago after learning that the company developed a vaccine against the coronavirus after it got the genetic sequence information on it. The company pulled this off in just 42 days. Pretty damn impressive, if you ask me.

Here’s how the stock has performed over the past week …

mrnaa

Of course, this is not a long-term investment for me. It’s merely a quick trade based on data that led me to the decision to buy it.

I don’t do many of these, as I just don’t have the bandwidth for it. Also, I’m just not a fan of trading stocks, in general. I prefer to just get some equity in a company I believe will deliver steady gains over a long period of time. It’s all about the long game for me. But when you get a no-brainer trade staring you right in the face, it’s hard to ignore it.