At the time of writing, the number of global coronavirus cases has passed 823,600, climbing significantly each day. With the COVID-19 pandemic fallout, many economies, including those of the U.S. and Canada, are facing the bleak reality of a recession. And stock market investors are asking: should I sell my stocks now before things get worse?
Investors Ask, Should I Sell My Stocks Now?
The economic problems are pretty apparent. Worldwide, whole cities, regions, or even countries have shut down. Permanent and temporary layoffs abound. Entire industries have shuttered. Travel stocks, like airlines, hotels, and restaurants, remain in freefall. Governments are pledging billions in assistance and emergency measures.
For investors, Mr. Market has taken a two-by-four to many of our nest eggs and started whacking them around like a pinata. So, it’s no surprise that investors are asking what they should do with their money right now. In fact, a popular search term on Google at the moment is, “Should I sell my stocks now?”
Before you panic, let’s examine how this will play out for North Americans.
Admittedly, things will get worse before they get better.
Over the next few weeks, the number of coronavirus cases will grow exponentially.
More towns, cities, provinces, and states will likely implement harsher and harsher business shutdowns and limitations on the public’s movements. City-wide shutdowns, like what we have seen in San Francisco, could become more commonplace.
It will take weeks for social-distancing measures to significantly slow the spread of COVID-19.
And, in more and more locations, the discussion will turn from containing the outbreak to treating the flood of people showing up in hospital clinics and emergency rooms.
You don’t need a fancy econometrics model to predict the impact on business. Much of North America will go into a recession. Millions will lose their jobs. Stocks will remain unpopular, to say the least.
The Truth about the Stock Market Sell-Off
But all this will pass. In time.
First off, much of the recent stock market plunge amounts to a massive margin call.
After years of calm markets, investors levered up their portfolios in a bid to boost returns. That left them exposed to a downturn.
Now, with stocks dropping by 20% and 30%, banks have started calling in their loans. That has forced hedge funds to raise cash, selling off anything that can catch a bid. Stocks. Bonds. REITs. Gold. It’s a fire sale and everything must go.
But the drop in prices doesn’t reflect the long-term prospects for many assets.
Looking ahead, at least one of the many coronavirus vaccines in progress will succeed. Yes, this development will take time. But several companies have formulas in the works. Human trials, in fact, have already begun.
And you’d better believe North American leaders will do whatever it takes to fast-track COVID-19 vaccine production and distribution.
Come fall, businesses will have to brace for the mother of all booms. What do I mean by this?
The pent-up demand for cars, clothes, smartphones, and houses will be overwhelming. All of this will be fueled by cheapo loans from the Federal Reserve and Canadian and U.S. government COVID-19 assistance for individuals and businesses.
In the U.S., Trump’s $2.0-trillion stimulus package will inject a great deal of cash into their economy.
Needless to say, stocks will also boom, on all North American stock markets.
Why It Could Be the Best Time to…Buy Stocks
In 12 months, the world will look like a different place. Customers will pack into restaurants and retail stores. Hotels and tourist destinations will reopen their doors. Events of all kinds will go full speed ahead.
As an investor, you’ll thank yourself for not bailing on perfectly good businesses at fire-sale prices. And you’ll be even happier if you added more investments when the stock market recovers.
And short-term panic aside, any businessperson with their head out of the sand should be getting fired up right now. You have millions of people sitting at home with nothing to do. Millions of workers have suddenly become “free agents.”
Yeah, much of the social-distancing public will sit around watching Netflix. But the smartest ones are going to create something amazing out of all this.
Over the next few weeks, the next round of great North American businesses will be created in bedrooms and apartments across the country. And when normalcy resumes, get ready for a “land rush” for customers among surviving businessess
Learn-To-Trade.com, Canada’s Leader in Stock Market Trading Courses
The stock market has obviously been suffering from the impact of the coronavirus. But some of those stocks had a correction coming anyway. Meanwhile, if you’re in the right financial position, the plunge in stock prices presents a potentially lucrative moment, with many excellent stocks trading at steep discounts. Before stocks rebound though, they will continue to experience extreme volatility. That doesn’t mean investors should run for the exits. The trading professionals at Learn-To-Trade.com can teach investors how to make money when stocks are bullish or bearish.
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