This week I returned from Japan. The number one question I received when I got back was: Did you catch the Coronavirus? And my answer is no. I did not catch the virus or even get sick.
Honestly, people in Japan were really not that concerned about the virus. There are more reported cases of the virus in the United States than there are in Japan.
I think people in the United States do not realize that Japan is an island that is not connected to the country of China. People generally just lump all of Asia into one boat.
Japan is amazing by the way. I would recommend that you visit once in your life. But back to the financial lessons I have taken away from the outbreak of the Coronavirus.
The news is in a panic. Wall street is in a panic. Everything you hear about the virus it seems is worst case scenario. Lock your doors. Hide your kids.
But lets examine some facts.
According to the CDC, over 30,000 people die each year in the US from the flu.
Each year over 16,000 people die from HIV/AIDS each year in the US.
So far over 2,500 people have died worldwide for the Coronavirus. There is no doubt this virus is bad news. And we should do everything we can to avoid it.
So what lessons have we taken away from this virus?
Prepare for the worst
We always hope for the best, but prepare for the worst. I am not someone that focuses on the worst case scenario. I like more the idea; go big or go home. But I am not going to stick my head in the sand and pretend that nothing is going on.
It is always good to have an emergency fund or rainy-day fund in case you get sick, lose your job or have children. Those things are the most unpredictable. You do not want to lose everything, because of one bad event.
The mob overreacts
There are so many terrible things in the world. Famine, war, slavery, poverty. It is all out there. And if we choose to focus on it, it can be paralyzing. It can make you depressed and take away any motivation you have.
You have to follow your intuition. I have had to learn that the hard way. I can easily see the negative in the world. You have to feed yourself positivity, inspiration and a healthy mental image. You have to believe and decide that you are going to be successful no matter the obstacles.
And that applies to your finances. Money loves you and flows easily to you. Tell yourself a mantra that you believe and makes you be better and work harder.
Keep your head down and your mind on your mission and you will ride out this panic and be ahead of the competition because you focused on the mission.
Be greedy when others are fearful
It is a sad truth that there is opportunity when people are fearful. Because of this virus the stock market dropped more than 1,000 points in a single day. That is the 3rd worst drop in history.
As this episode continues the stock market will likely continue to drop. And that presents a buying opportunity for you.
This virus is not going to last forever. The worst stock market crash of my lifetime 2008, was not the end. And less than a decade after that terrible crash the stock market had not only recovered, but increased in value.
In 2008 I was graduating from college and did not have any money to invest, but today is a different story. Because of dollar cost averaging I am taking full advantage of this drop in the market to purchase shares at a discount.
This to shall pass. No one can tell you how long this episode is going to last, but it will eventually end. China will eventually lift the ban on travel. The economy will recover.
If you continue to purchase stock during this period you will reap the benefits of capital gains.
There are also specific opportunities to look for during this period. Airlines are being hit extra hard by the lost travel revenue. iPhones are not being sold in China. Any business that receives the majority of its revenue or manufacturing from China is going to be hurting like WYNN, DAL, NKE etc.
As for you…
Take precautions to protect your health. Wash your hands, take your vitamins etc.
But do not live in fear. Fear will rob you of joy. Fear will keep you from achieving great things.
Look for opportunities to create value even in turmoil. When there is panic even more people need you to stay calm.
Take advantage of this time to invest and plan so that you can reap the rewards when summer comes and everything roars back to life.
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