Coronavirus has taken the world for a troll. There is nothing more important than the safety of yourself and your loved one. The whole world is facing a big problem. All the major stock markets in the world are falling like anything. Today, in this article we will discuss the coronavirus market crash and its impact on the stock market.
There are four possibilities of the coronavirus epidemic and the economy and of course your money.
Scenario 1 : Coronavirus will be dead by summertime and the economy will go back to normal.
Scenario 2 : The virus is slow down with the help of vaccine.
Scenario 3: the virus is slow down, but the vaccine is still far away, businesses have huge losses and you will see high layoffs.
Scenario 4: Coronavirus keeps on spreading throughout the world, the businesses will have to shut down. Loss of lives and jobs.
This all started in December 2019 at Wuhan in China. There is a sudden virus outbreak and people started falling sick and started dying. The city was completely quarantine so that the virus could not be spread more.
But that’s already too late. The virus got spread in more than 100 countries across the world. India is also affected by the virus. Though the virus outbreak in India is still under control. There are around 125 cases of Coronavirus reported in India so far.
There is a huge negative impact on the businesses and hence the stock market got crashed like a falling knife. The government have declared this as an epidemic and hence schools and colleges are shut down till 30th march 2020.
The stock market hit the circuit breaker and the trading was to be stopped for 45 minutes. In the last one month, the stock market has fallen down by 30% from its peak level and entered the bear market.
Here are the 7 things you need to know about your money in this panic situation.
CoronaVirus Market Crash – 7 Things You Need to Know
Check the below 7 points on what to do in the coronavirus market crash? How to save your money?
The Factsheet
There are more than 150000 worldwide cases reported for coronavirus till now. And the death count is around 5000. That’s not huge if you check any flue or virus has this much of death ratios. But the coronavirus is more lethal than the other viruses.
The virus is contagious and hence spreading faster than you think. There is no vaccine available till now that can cure the virus. Only the preventive measures can save you from this deadly virus.
Businesses like travel, hotel, and leisure are suffering a huge loss due to this virus outbreak. This has also impacted the import-export business of India.
The correction was due
The stock market has a history of going up and down regularly. It is a normal phenomenon for the stock market. This fall is not for the first time for the market.
If you check, there is a history of stock market moving up and down. Here is an interesting piece of date from Freefincal. Which says there are 50 instances when the stock market falls so sharp in a day.
| Date | Daily returns |
| 08-Jan-82 | -7.21% |
| 16-Aug-85 | -5.70% |
| 30-Sep-85 | -5.82% |
| 07-Mar-86 | -5.34% |
| 11-Oct-90 | -5.58% |
| 15-Oct-90 | -8.74% |
| 22-Oct-90 | -6.70% |
| 12-Nov-90 | -7.11% |
| 29-Nov-90 | -5.90% |
| 18-Dec-90 | -6.46% |
| 07-Mar-91 | -7.62% |
| 10-Mar-92 | -6.53% |
| 28-Apr-92 | -12.77% |
| 29-Apr-92 | -5.71% |
| 06-May-92 | -8.41% |
| 11-May-92 | -6.50% |
| 12-May-92 | -9.76% |
| 15-Jul-92 | -5.44% |
| 10-Dec-92 | -5.44% |
| 01-Mar-93 | -7.63% |
| 09-Mar-93 | -5.45% |
| 16-Jan-97 | -5.23% |
| 31-Mar-97 | -8.26% |
| 15-Jun-98 | -5.81% |
| 05-Oct-98 | -7.23% |
| 17-Apr-99 | -6.88% |
| 04-Apr-00 | -7.15% |
| 17-Apr-00 | -5.63% |
| 02-May-00 | -6.13% |
| 24-Jul-00 | -6.17% |
| 22-Sep-00 | -5.28% |
| 13-Mar-01 | -6.03% |
| 14-Sep-01 | -5.27% |
| 17-Sep-01 | -5.27% |
| 21-Sep-01 | -5.85% |
| 14-May-04 | -6.10% |
| 17-May-04 | -11.14% |
| 18-May-06 | -6.76% |
| 21-Jan-08 | -7.41% |
| 17-Mar-08 | -6.03% |
| 06-Oct-08 | -5.78% |
| 10-Oct-08 | -7.07% |
| 15-Oct-08 | -5.87% |
| 17-Oct-08 | -5.73% |
| 24-Oct-08 | -10.96% |
| 11-Nov-08 | -6.61% |
| 07-Jan-09 | -7.25% |
| 06-Jul-09 | -5.83% |
| 24-08-2015 | -5.94% |
| 09-03-2020 | -5.17% |
| 13-03-2020 | -10.00% |
So don’t panic, the things will be ok in the long run. This is just a momentary situation where you need to sit tight and do nothing.
Hold on your emotions
The stock market crash makes you think like doing suicide or getting rid of the stocks in your portfolio which are bleeding. Some people have already sold all their portfolios and run away from the stock market.
This is not how you should react in this panic situation. If you are holding good stocks in your portfolio, you need not worry much about its going red.
Investors need to understand that the businesses are not doing bad or there is some extremely wrong with the economy of India.
It is just a matter of time and the market will recover. (for sure) When and how much? well, nobody can say that in this world.
Rather, you need to take care of your finance more than ever at this moment. Because when you will come out of this situation, if you have to manage your finance well, you will make huge money in the stock market.
Measures to restrict virus outbreak
There are all the possible measures being taken by the government of India to restrict the virus from spreading more. All the government gathering will be canceled, all schools and colleges are closed. Public gatherings are banned. Trains and flights are canceled.
RBI will soon announce the rate cut due to slow down in the economy.
So if these steps will help us to restrict the virus from spreading more, there could be a reverse scenario soon. Life will come back to normal. People will not lose jobs. The economy will come back on track.
The stock market will recover and you will once again have faith in the stock market and start investing.
Recalculate your returns
Most of us have done some financial planning for the future. For the retirement planning, for the high education of the children and so on.
Now, these calculations were being done keeping the certain % of return in mind. Let’s say you have assumed a 15% return on your investment. Now with this economic slowdown due to CoronaVirus Market Crash, the government will do frequent rate cut and the returns will drastically come down.
All your calculations will go wrong just with the reducing return rate on your investment. So you need to keep a watch on your return from your investment in the coming years.
Impact on businesses
There are many industries like hotels, restaurants, travel, sports, etc are depended on the people’s footfalls. Now due to this virus outbreak, public gathering has been banned by the government.
So these businesses will suffer losses this year. There will be more job cuts and businesses will not able to pay off their debts to the banks. So the NPAs of the bank will go up drastically as many businesses will make default in making payments.
So the banking sector will also get hit by the coronavirus outbreak. So you need to understand the nature and business of the company for which you have bought stock.
On the other hand, if more and more people will lose the job, they will not have the purchasing power and they will also cut down on their living costs. So they will also not going to take a home loan to buy a new house.
What to do with your money?
The current stock market scenario is very risky for people who want to invest for a short time. As we don’t know when this virus thing will get over. When the businesses will again start making money? When the economy will be back on track?
But one thing is sure that some smart people will come out of this situation wisely and will become super-rich after some time.
As Warren Buffett said: ” Be fearful when others are greedy, and be greedy when others are fearful.”
Right now people are scared, they think things will get worst and never be back on track. One side there is a fear of losing all your money under this risky situation and on the other side, there is this golden opportunity of investing in the business which will recover fast.
Remember, investing has risk, you might even lose your money. But at the same time, the opportunity is extremely high.
Markets are emotional, when things go wrong they will go even worst. But you have an opportunity to buy stocks at the dirt-cheap rates which will never come again in a decade or so.
Conclusion: CoronaVirus Market Crash
As I mentioned above there are two sides to the coin, one is fear in the market and another is the opportunity in the market. Smart people will take this as an opportunity and makes millions while fearful people will lose money and go bankrupt.
As per me, in the current situation, I would prefer to go for a SIP route of buying a stock. Invest some portion of your capital every time the stock price comes down. This way you will average your buying and when the market recovers, you will make good money out of it.
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