Markets - Minor Correction? (Edit: Question Answered)

DairyQueen

A sea of red but not exactly the 'bloodbath' of media headlines. Looks like mainland Europe is coughing whilst the US is barely beyond a sniff so far.

Is this the beginning of the long-anticipated correction or just another slightly bad (coronovirus) day at the office?

Edit: Ouch!...We have the answer.

Anonymous101

There's no way of knowing. A lot will depend on the severity of the virus if it is particularly bad then it could be the start of a serious decline... but then it could be a quick recovery and then just a bump in the stock market road. Only time will tell.
As an aside, didn't the last major correction start around the same time as sars or birdflu??? 

Thrugelmir

Markets react to news.  Lost output = decreased profitability as far as the major companies are concerned.  
How weighted is your portfolio to the most affected sectors? Shipping, aviation, miners, oil, semiconductor manufacturers etc. Amongst the deep red there's a smidgen of black. Not all companies are impacted equally with many not at all. 

Thrugelmir

Anonymous101 said:

As an aside, didn't the last major correction start around the same time as sars or birdflu??? 

During the GFC. When people woke up to the fact that the world's major banks were in crisis and over leveraged. 

Alexland

Another of those days when it would have been cheaper to set fire to our cars. Still my equity ETFs have only been set back around 1 month in their valuations. If this gets worse then I will follow my normal procedure of gradually tilting asset allocation into equities then riding the return to previous valuations however long that takes.

Thrugelmir

Alexland said:

Another of those days when it would have been cheaper to set fire to our cars. Still my equity ETFs have only been set back around 1 month in their valuations. If this gets worse then I will follow my normal procedure of gradually tilting asset allocation into equities then riding the return to previous valuations however long that takes.

Retail investors are unlikely to have been actively trading yet. This is just the market makers protecting themselves. 

Anonymous101

Thrugelmir said:

Anonymous101 said:

As an aside, didn't the last major correction start around the same time as sars or birdflu??? 

During the GFC. When people woke up to the fact that the world's major banks were in crisis and over leveraged. 

Yes, that was the main cause. I was just making an observation that I think SARS was around at the same time?

Thrugelmir

Anonymous101 said:

Thrugelmir said:

Anonymous101 said:

As an aside, didn't the last major correction start around the same time as sars or birdflu??? 

During the GFC. When people woke up to the fact that the world's major banks were in crisis and over leveraged. 

Yes, that was the main cause. I was just making an observation that I think SARS was around at the same time?

A few years earlier around 2003/04. 

John464

Thrugelmir said:

 Lost output = decreased profitability as far as the major companies are concerned.  

If output is lost. products become scarce and prices rise - so other companies benefit.
So I'm hoping there will be winners to balance out the losers in my index funds.

DairyQueen

The US market is interesting. The FAANGs have been hit relatively hard:
Facebook -5.25%
Apple -4.11%
Amazon -4.43%
Netflix -3.79%
Alphabet -4.48% 

Relative to:
Dow -3.43%
S&P 500 -3.51%
Nasdaq -3.75%

Those with a diversified portfolio (most of us, I hope) will be pretty sanguine. Those with direct, concentrated holdings in the big US techs may be a tad more interested. 

Thrugelmir

John464 said:

Thrugelmir said:

 Lost output = decreased profitability as far as the major companies are concerned.  

If output is lost. products become scarce and prices rise - so other companies benefit.
So I'm hoping there will be winners to balance out the losers in my index funds.

Sounds so simple. Yet the cheapest and most basic of components that manufacturers require almost exclusively originate from China. For example keyfobs for Jaguar Land Rover cars.