It’s no secret that the COVID-19 virus, that most people know as the coronavirus, has infected the?U.S. stock market?with fear and uncertainty, sending stock values on record-setting declines.
And most investors felt the shock. Market fears over the virus have hit certain industries harder than others, but nearly all sectors saw a drop in value.
But you might be surprised to know that the market’s reaction to the coronavirus isn’t all bad, and smart investors are positioning themselves to exploit new opportunities.
Fear over the spread of the virus has affected most of our stock portfolios but believe it or not, the effects are not always bad. Smart investors use these types of environments to take a closer look at their investment strategy and tweak them where ever it makes sense.
7073彩票注册Here are three ways the coronavirus will affect your stocks and how you can take advantage of your investment opportunities in an uncertain market.
A widespread temporary drop
First, and perhaps most obvious, we are all affected by a wide-ranging?drop in stock portfolios. The ripple effect of coronavirus fears sent shock waves throughout Wall Street and blanketed almost every industry with fear and doubt, and those conditions are ripe for steep, but often temporary, losses.
7073彩票注册Remember that smart investors invest for the long haul. Steep drops should not automatically be a cause for panic or selling of your personal portfolio.?Instead, use this drop as an opportunity to keep yourself honest. After months of record-breaking stock market increases, investors, especially younger investors, may have forgotten that the market ebbs and flows. The market isn’t always up.
This is your chance to knock yourself back into reality. Double-check your diversification.?Talk to a financial adviser?about opportunities to buy. Understand that despite the last several years of near constant growth, stock market investments are still?inherently risky.
Many businesses have eliminated or reduced employee travel in the hopes of stopping the spread of the virus. As a result, the demand for fuel around the world has decreased significantly, which has sent the price of oil down.?Take a close look at oil in your portfolio and diversify if it makes sense. Or if you’re not currently invested in the energy sector, this may be an opportunity to buy.
7073彩票注册Here’s what not to do: Don’t be fear-driven. This is an opportunity to re-evaluate your portfolio, , and make changes — not to bail out entirely on certain sectors or overcommit by reducing your overall diversification.
Opportunities to buy up cheaper stocks in oil and manufacturing could be right around the corner as they begin recovering from the gut-punch of the selloff. Pay attention to stocks like
However, resist the temptation to overbuy at this juncture. We are still relatively early in the coronavirus effect and it’s very tough to predict how fears over its spread will influence stock market values in the future.
Things to remember:7073彩票注册 The coronavirus isn’t yet contained. In an election year in the U.S., emotions run high and investors tend to pull back during periods of uncertainty and a possible changing-of-the-guard. It might be wise to tread lightly, but be ready for opportunities to scoop up cheap stocks, and these opportunities might include?.
Successful investors use all opportunities to think about their portfolios and re-evaluate their options, and that includes the market’s reaction to the coronavirus. They don’t let their emotions run rampant. Instead, they use uncertainty and fear to exploit undervalued stocks or unbalanced diversification.
7073彩票注册There are still a lot of unknowns about the coronavirus and how it will affect health and the stock market in the future. The best thing to do is to pay attention, talk to a?trusted financial adviser?and exploit opportunities when they appear. And continue thinking long term.
This column first appeared on . It was republished with permission.