Coronavirus, Market Volatility & WFH
Happy Friday Y’all!
It’s been another wild week on the continued news of Coronavirus spreading. There are extremists on both ends, but in any case, let’s all do our part to be safe!
At the end of the day, the most important thing to do is be good stewards and kind to each other. Take pre-cautions, but don’t over-react as to cause unnecessary fear.
Here are 5 topics I chewed on this week (mostly effects from news of Coronavirus) that I thought were worth sharing…
Pre-cautions…
As of now, it is really the elderly who are most at risk.
However, to be safe, many major conferences have been cancelled, companies are implementing work-from-home (“WFH”) policies, some schools are being cancelled, and even the olympics (set to be in Tokyo this Summer) may be postponed.
As of yesterday, new cases in China are reportedly slowing. Though, expectedly, cases outside China are still on the rise.
Market Volatility: the lows…
(Last week) markets suffered their worst week since the 2008 financial crisis — all 3 major indexes fell over 10%. Source: CNBC.
The overall market volatility has been out of control.
The DOW had its biggest dip in history last Thursday (Feb 27th). Some companies taking bigger hits than others (ie: travel, retail non-essentials, etc.), with the rising fear/uncertainty of Coronavirus.
Another Carnival cruise-ship was found with infected passengers, and as a result Carnival’s stock price has suffered; it’s down ~17% for the week, and ~35% over the last 30 days.
Decline in valuations this week: Apple -$173 billion Microsoft -$155 billion Google -$115 billion Amazon -$105 billion Facebook -$58 billion Visa -$57 billion Mastercard -$54 billion JP Morgan -$53 billion Disney -$38 billionThe S&P 500 (SPY) will close out this week down just shy of 1%. Down ~9% trailing 30 days. Yet, still up ~6% trailing 12 months.
It’s not all bad news.
Market Volatility: the highs...
On Monday, March 2nd, the S&P 500 had it’s largest one-day gain (by points) in history, and again on Wednesday, the second largest one-day gain by points.
Other companies are benefiting financially from the news, based on their sector.
Zoom Video Conferencing, for instance, helps people communicate digitally. So, as more folks work from home, and meetings get changed from in-person to digital, Zoom is positioned to capture a lot of new users. They reported that they’ve signed more customers so far this year than in all of 2019 combined. Their stock spiked 25% last Friday, but has hit ups and downs over the last week (presumably from some investors taking money off the table). Overall, ZM is up ~4% this week and ~26% in the last 30 days.
Side note: another company called “Zoom” (Beijing company that sells mobile phone components) doubled in price this week when people purchased it on accident, thinking it was Zoom Video. The same thing happened when Zoom Video went public in April last when, and (the other) Zoom saw a 54,000% increase in it’s stock price!
A Warning…
Silicon Valley Venture Capital firm, Sequoia Capital, sent out the following memo: “Coronavirus: The Black Swan of 2020”.
The title is inspired by Nassim Nicholas Taleb’s best-selling book, The Black Swan: The Impact of the Highly Improbable, which is a fascinating read on improbable events and how they affect the world. I highly recommend it. Here is the summary of it on Good Reads.
I believe the (opportunistic) silver lining here is an invitation to be frugal, adaptive and creative. Here’s a snippet from Sequoia’s letter:
Adapting to the Changes…
Many people are adapting. Others are suffering from abnormal behaviors. Robinhood, a stock trading app, was down Monday morning (one source alleging it was due to an error in code because of the leap-year!). Rightfully so, they caught a lot of flak because it meant that many traders lost money as they could not liquidate during the dip.
[Note: due to having lots of market pricing in today’s newsletter, I wanted to wait for the markets to close at 5pm EST, before sending this out, to include the latest pricing.]
Talk to y’all next week!
Until then, keep washing those hands!
Cheers,
Brendan J Short