Coronavirus highlights financial insecurity
February 5, 2020
Every new virus unnerves many. Every day there are new developments about the coronavirus spreading through China and the world.
As of Feb. 3 it’s killed over 300 people since its outbreak, more bodies will continue to pile up. However, the flu is responsible for killing 12,000 to 61,000 people every year in the United States, making the coronavirus’s American health implications less serious than the flu.
People should not take the coronavirus mortality seriously. However, everyone should be concerned with the virus’s impact on the world’s wallet.
In a globalized economy, every national event has worldwide implications. On Jan. 27, U.S. stock prices dropped to their lowest since October and continue to drop as panic over the virus escalates. This not only affects large corporations, but common citizens. Any potential investor should be wary about these economic conditions.
In financial markets, there is a concept known as“risk velocity,” which highlights how fast stock prices drop after a serious event. This is not a new concept: serious events have always shaken up the market. However, it’s only going to get worse and more prominent as time goes on.
As the world becomes more connected the echo of these international events will begin to shake up international markets. We live in a global echo chamber, where a wolf’s cry can disrupt international markets in massive ways.
In the next 10 years, the coronavirus will not be the only massive event that will cause the markets to plummet. More are coming. This is a sign of more to come.
