If you’ve been following the news recently, you’re already aware of the global health crisis affecting the stock market:
A disease known as the coronavirus has been wreaking havoc.
Chinese factories have come to a screeching halt. Countries in the Middle East have closed their borders. And U.S. markets have plummeted by upwards of 15% in just days.
This is more than a “blip on the radar.” This is here to stay.
That’s why we have to prepare ourselves financially to weather this storm — and that’s why we’re about to help you prepare a “battle plan.”
But before we get into it, let’s take a step back…
First, let’s look at what the coronavirus is — and why it’s causing a global meltdown.
What is “The Coronavirus”?
To be clear, there is no “the coronavirus.”
Coronaviruses are a group of viruses found in humans and pets, as well as in birds.
For the most part, symptoms are similar to those of a common cold. But some coronaviruses are lethal.
For example, in 2002, there was a coronavirus outbreak in China called SARS (Severe Acute Respiratory Syndrome).
SARS had a fatality rate of roughly 9%. Meaning, one out of every 10 people who came down with the virus would eventually die.
The most recent coronavirus — it’s known as “COVID-19” — has a much lower fatality rate. So far, the rate is about 1% to 3%.
So, given its lower fatality rate, why is COVID-19 causing such a panic?
Why the World Is Terrified of COVID-19
There are two factors that determine how serious a virus like this is.
The first is how fatal it is.
And the second is how viral it is. In other words, how easy is it for one person to transmit it to another? And this is where COVID-19 gets really scary…
At its peak, SARS infected about 8,000 people over the course of 9 months.
COVID-19, on the other hand, has already infected nearly 100,000 people.
Meaning, it’s 1,250% more viral than SARS. And this is why governments and global stock markets are in an all-out panic.
How Bad Could Things Get!?
U.S. markets right now are more volatile than we’ve seen in years.
The VIX, which measures market volatility, is at its highest level in five years. And the Dow has plummeted by as much as 15% in just one week.
China, the epicenter of the COVID-19 outbreak, has suffered even more:
Not only has the Shanghai Composite Index (SHCOMP) dropped by as much as 20%...
But as CNN recently reported, due to mandatory industry shutdowns, the entire economy is expected to shrink for the first time in nearly 50 years.
And because China is the world’s second largest economy — as well as a manufacturing hub for many global industries — this could have catastrophic consequences for dozens of countries and hundreds of companies.
For instance, as USA Today reported, due to the impact of COVID-19 on its Chinese supply and manufacturing partners, Apple will likely miss its Q1 revenue and profit targets.
How to Prepare Yourself
Given how early we are in this outbreak, and given its virality, we have a ways to go before the market finds a bottom.
In other words, things are likely to get much worse before they get better.
Which is why we need to start preparing ourselves, and our portfolios, for what’s to come.
And that’s why, over the next few weeks, Matt, Lou and I will be publishing a series of Crowdability newsletter issues covering the crisis.
We’ll share key insights and action plans…
And most importantly, will provide you with actionable steps you can take to help you weather the storm.
So keep an eye on your inbox. Next Tuesday at 11 AM EST, Lou will take you “back in time.”
He’ll walk you through past health crises — and reveal how they can provide you with a blueprint for navigating this one.
So stay tuned!