Every year we’re warned to get our flu shots. We’re told that the flu kills tens of thousands of people each flu season, and we’re constantly being reminded of the potential dangers of the disease. And at the back of many people’s heads is the history of the Spanish flu, which killed between 20 and 50 million people worldwide in 1918.
Public health authorities always like to point out the dangers of a pandemic disease of that sort, and it seems like every few years there’s some type of disease that rears its head and scares people silly. In the early 2000s it was the SARS virus, which came from China. A few years ago it was Ebola, in Africa. Then it was the Zika virus, in Brazil. And now we have the coronavirus, once again from China.
Coronaviruses in themselves aren’t scary, as the common cold is caused by a coronavirus. But this particular virus seems to be stronger than most, a new type that hasn’t been seen anywhere before. While its fatality rate is low, it’s still causing deaths. And more importantly, it seems to have been transmitted around the world, thanks to world travelers bringing the disease back from its epicenter in Wuhan, China.
Two weeks ago it seemed that stock markets were on a roll, with the Dow Jones headed for 30,000 points. But the news of the coronavirus last week sent stock markets tumbling, a drop that has accelerated this week. Markets that have shrugged off tariffs, trade war, missile attacks in the Middle East, and all sorts of deteriorating economic numbers all of a sudden have seen huge drops due just to a virus. Why is that?
Perhaps the biggest fear among many investors is that a spread of this virus throughout China will result in a significant decrease in Chinese economic production. China’s Lunar New Year was this past Saturday, so the country is already on vacation as most workers have returned to their families to celebrate. But now there’s real uncertainty about whether or not they’ll be able to travel back to the cities to work. And some cities have even banned businesses from operating, so as to keep people from congregating and potentially spreading the disease.
Imagine all Chinese businesses shutting down operations for the next month, and the effect that would have on China’s economic output. It’s not hard to imagine the negative effects that would have on world trade and world markets. And that’s why stock markets are starting to freak out.
Is this the catalyst that was needed for the final stock market correction to occur? Looking at it right now, it’s hard to believe so, especially as only a few dozen people have died from the coronavirus. But looking down the road a few weeks or months from now, it’s not hard to envision this disease becoming pandemic and really wrecking businesses and the economy.
Are you prepared for a stock market crash? Have you taken the right steps to protect your retirement savings? If you haven’t already invested in gold, silver, or other alternative investments to protect your investment portfolio against a stock market crash, you might be in for a rough ride this year. Make sure that you don’t wait any longer to safeguard your retirement savings.