Markets and Pandemics


With the coronavirus shutting down the entire global economy, and the Dow Jones tanking by over 30%, you would not be wrong in calling the state of the world grim. However, there is at least some consolation amidst this terror - namely that nothing new EVER happens on Wall Street. While the standard of living for most has drastically increased since the early 1900s, it is important to bear in mind that fear and disease have always been a staple in the human experience. In this article, we will present some of the world's past pandemics to better understand the ramifications that investors will face in wake of the coronavirus.

On March 17, 2009 patient zero contracts the swine flu. In June of that year, the World Health Organization declares it a pandemic. Markets quickly respond with a 5% drop, but by the Fall have recovered and then some. What most be noted about the swine flu pandemic is that is was occurring after one of the bloodiest financial crashes in recent history. As a result, many companies were extremely undervalued and may not have had the same price action as when the economy is in a more developed bull market.


The Hong Kong flu of 1968 bears a number of commonalities with the 2020 pandemic. Unlike the 2009 outbreak, the economic effects of the HKF were severe - knocking the DJI down by as much as 13%. Like the Swine Flu, markets recovered after going sideways for several months. Despite a large pullback in the market, new treatment options and strategies for containment will help markets recover as they did for 1968 and 2009.


What makes the coronavirus unique with respect to past epidemics is the global response that it was met with. This can be seen with the shutting down of restaurants, manufacturing, and other businesses that make the world turn. Once this illness has died down, it will be interesting to see how macroeconomic trends change as a consequence of the global response. The disquieting amount of liquidity that has been pumped into our financial system has only reaffirmed our hyperinflation cycle. We expect to see a major pop sometime in between Q2-Q4 of 2020, and to all of our investors, we say buckle because we are heading over the rainbow to Oz!

©2020 Hedge Fund Z

 

 

 

 

 

 

 

 

 

Important Disclosures: Investing in the financial markets can involve considerable risk, including loss of principal. Past performance is not necessarily an indication of future performance.  Actual clients may achieve results materially different from the results portrayed.  All material is for informational and educational purposes only and is not investment advice and is not meant to suggest that any securities are suitable investments for any particular investor.  All information reflects our own actions, beliefs, and processes for purely informational purposes. HEDGE FUND Z LLC IS A FINANCIAL BLOG FOR THE SOLE PURPOSE OF EDUCATION.  HFZ does not represent themselves as acting in the position of an investment advisor or investment manager for funds that are not under their direct control and fiduciary responsibility. 

 

Third party quotes and information may not be representative of the experience of HFZ customers and do not represent a guarantee of future performance or success. Many of the results displayed on our website were achieved using leverage, such as 2x or 3x leveraged ETF's or equity options 

 

The information included at HFZ and HFZ writing, research, and updates is prepared for educational purposes and is not a solicitation, or an offer to buy or sell any security or use any particular system.  Information is based on historical research using data believed to be reliable, but there is no guarantee as to its accuracy. HFZ does not represent themselves as acting in the position of an investment adviser or investment manager for funds that are not under their direct control and fiduciary responsibility. HFZ will not provide you with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio or securities, transaction, investment strategy or other matter.  

 

No information, nor any opinion expressed on the Site or in the Services, shall constitute a solicitation or an offer to buy or sell any securities mentioned therein.  The information presented on the Site and in the Services has been prepared without regard to any particular investor's investment objectives, financial situation, needs, capacity, and trading ability or experience. Accordingly, you should not act on any information on the Site or in the Services without obtaining specific advice from your financial advisors and should not rely on information herein as the basis for your trading and/or investment decisions.  HFZ cannot claim or represent that any of our Services are suitable for you. 

 

By your use of the Site and Services, you're agreeing that you bear responsibility for your own investment research, trades, and investment decisions. Only you can decide whether or not a trade is right for you and you agree to be liable for any trades you initiate at your brokerage using research and/or tools that we provide. If you ignore our advice to do independent research and choose instead to trade solely on information, analysis, alerts or opinions found in our Service or website, you have made a conscious, willing, free, and personal decision to do so. You also agree that HFZ, its directors, its employees, subsidiaries, affiliates, and its agents will not be liable for any investment decision, trade made or action taken by you and others based on news, information, opinion, or any other material published through our Site and Services.  

For additional important risks, disclosures, and information, please visit www.hedgefund-z.com/terms-and-conditions.