The Year of the Coronavirus: Aussie Investors Hit Hard

Following Wednesday’s losses on Wall Street, the Dow Jones Industrial Average was down 29.2% on Thursday from its 12 February peak.

That’s some hefty financial pain.

The scale of human suffering is far worse.

As at writing more than 215,000 Americans are confirmed to be infected. The actual number is likely far higher. The virus has already claimed 5,100 lives in the US. By the time you read this that figure will likely have risen.

Even with social distancing measures, medical experts are forecasting the death toll may surpass 240,000 in the US alone. Of course, even the experts are just offering educated guesses. We can only hope the actual numbers will be far less…not far more.

On the viral front, Australia is faring better so far. Just over 5,000 cases have been confirmed, with 23 deaths. Taking our much smaller population into account, it means we’ve suffered only 6% of the per capita deaths the US has. So far.

Let’s hope our early action and continued diligence pays off.

But that diligence, as you know, comes with a hefty price tag.

Not just the daily psychological struggle of social distancing, isolation and the growing wave of job losses. And not just the hundreds of billions of taxpayer dollars the government is providing in various emergency relief packages. Or the 0.25% cash rate that’s sucking the returns out of savings.

But almost every Aussie investor has been hit hard.

The ASX 200 reached its record high eight days after the Dow Jones, on 20 February.

A painful two weeks…

Despite a few impressive bounces — including three record daily gains — the ASX 200 is down 28.1% since then.

On Thursday the Aussie market was down 2.0% in intraday trading.

And this likely isn’t the bottom. We should see some big daily gains yet. But they’ll probably be followed by periods of even bigger losses. That’s how bear markets tend to work.

Even Donald Trump has drastically changed his formerly optimistic tune. ‘We’re going to go through a very tough two weeks. This is going to be a very painful, very, very painful two weeks,’ he said in a press conference yesterday.

While that’s undoubtedly true, two weeks is still a highly optimistic time frame. The health crisis in the US, Australia and the rest of the world is likely to persist far longer.

As will the financial crisis gripping global markets.

Proceed with care!

PS: While most every stock has come under selling pressure, The Rum Rebellion editor Vern Gowdie lists five stocks he believes you should consider selling immediately. You can find out which ones, and why, in his free special report here.

Bernd Struben is an Editor of The Rum Rebellion. In this capacity, he has access to one of the most intriguing and powerful networks of practical investment insight anywhere in the world.

Bernd has worked on four different continents, and has more than 20 years of professional finance, editorial, and management experience. He holds a degree in economics.

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