The Dow Drops 400 Points On Virus Fears

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The stock market is on shaky ground. It is obvious by the split between bulls and bears. There is no doubt the market performed outstanding over the past year (actually decade).

When markets go on prolonged runs. It makes people very nervous. This is magnified when the underlying "fundamentals" do not universally support that outlook.

Of course, we are free to pick and choose what we focus upon. While one could say the debt level is a problem, the ability to service it is easier considering where rates are. At the same time, the economy is not on fire yet housing keeps humming along. We see unemployment at record low levels although a case could be made that we created mostly second and third jobs with the quality (read pay) lacking.

The market staged a sell off with a black swan-type event, a virus. Coronavirus set off fears not only in China but globally. As cases are reported around the world, people are concerned with how far this can spread.

It is always interesting to watch how the financial media tries to apply causation to markets. In this instance, even Cramer was calling for a market sell off. In fact, he believes the panic was overdue and is healthy for the market. Yet, in his opinion, now is not the time to jump back into stocks.

https://www.cnbc.com/2020/01/27/cramer-on-selloff-this-is-the-panic-people-have-been-waiting-for.html

A fear like this is exactly what market needs at times. Sell-offs are not a bad things especially when things are overextended. It helps to clear out some of the weaker hands while letting long term holders take some profits.

Situations like this rarely end up in the start of a market collapse. Naturally, there is the chance that it could which is what everyone always fears. However, the likelihood, unless this virus becomes widespread on a global scale, it will end up just provide a buying opportunity for market participants.

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Posted via Steemleo