A Pandemic of Fear

As February began, most investors were keeping a cautious eye on the coronavirus that was spreading in China. While there were isolated outbreaks around the globe, they were just that—isolated. Some firms began to back away from prior financial forecasts, but a mistaken belief the illness would be contained to China kept markets at inflated levels. That changed dramatically when headlines surfaced that the coronavirus had spread to northern Italy, South Korea and Iran.
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Financial Impact of the Coronavirus

On Friday, January 17 – after a spectacular 40% run-up that started the day after Christmas 2018 – the Standard & Poor’s 500-Stock Index closed at 3,329.62. Two weeks later to the day –Friday, January 31 – the Index closed a little over three percent lower, at 3,225.52. (Indeed, more than half that damage was done on Friday.) We have therefore been invited by financial media to suspect that the blended value of 500 of the largest, best financed, most profitable businesses in America and the world has “lost” three percent – with more “losses” to come – due to the outbreak in China of a new strain of coronavirus.
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