Plunging Stock Market From Coronavirus Fears Provides Investment Opportunities
LAFAYETTE (KPIX 5) -- While fears over the coronavirus outbreak have slammed financial markets around the world, there are those who think this may actually be a golden opportunity for those with money to invest.
Lately, the news from Wall Street has been bleak every morning. In the blink of an eye, the stock market lost nearly 25 percent of its value. In Lafayette, Jared Solomon knows people who have lost a lot of money.
"It's crazy," Solomon said. "Every morning, it's just all in the red. It's like a little stressful. I think it's a little…it's panic."
It is panic, said St. Mary's College Finance Professor Dr. Lawrence Souza; a panic worsened by the uncertainty of the pandemic.
"You have to go back to 9/11 or the financial crisis to find the speed," he said. "But we haven't seen this level of supply disruption and demand disruption probably ever."
Dr. Souza said stocks were already overpriced and the crisis is causing a correction that would have come anyway. And he's convinced the damage already done will create a recession. But for how long?
"Is this 2008-2009 all over again? We don't think so," said Scott Horton, President of JP King Advisors in Walnut Creek.
The firm advocates for a diverse portfolio to protect clients in moments like this. Horton acknowledges that people have taken a beating on their stocks, but said those with money to invest should look at the market as an opportunity for amazing bargains.
"At some point, prices get so low that people look past the negative news, because prices are so low," Horton said.
That's especially true if people believe the outbreak will end fairly soon. Horton said China's infection rate is already declining and, amazingly enough, its stock market has already recovered most of its losses.
"And so, if their stock market is any indicator of what may be ahead for ours, it was a very speedy recovery," he said.
Dr. Souza believes the severity of any recession caused by the outbreak will depend on the damage to major industries like airlines and retailers and the government's willingness to stimulate the economy. There is no timeline for that, but a recovery cannot start until the pandemic is brought under control.
The professor says China's aggressive action to contain the virus seems to have worked well. He thinks it will set a new standard for the entire world in controlling pandemics and the financial panics caused by them.
