This forum and the market in general has completely missed the point on covid-19 for weeks. The mods have not helped by forcing by far the most important short term (and potentially medium term) macroeconomic driver into a sub forum.
Unless you get off on doomsday predictions, from an economic perspective it is largely irrelevant how dangerous covid-19 is relative to other outbreaks. I can sit here and agree with you that I am more likely to slip and die in my own home than from this virus.
What is far more important is how economic actors have responded to the risk. And in affected areas, you only have to look at the response from: governments, employers large and small, airlines and individual consumers.
Life in big chunks of Asia has for most people changed beyond recognition in the last month, and there is very little economic activity taking place. It’s just been made too damn hard.
Governments have rolled out quite stiff restrictions that have been gold plated by Health and Safety officers of employers, which in turn has further affected the behaviours of individuals, who are taking their cue on how scared to be from those in authority.
It is clear to anyone living here that we’ll have a recession, though you’re purely guessing if you think at this moment you can predict whether this will be a shallow V Shape or something else.
Because covid-19 had barely arrived outside Asia, most of the money in global markets has remained relaxed. But in Europe you are now starting to see cancellation of public events, impediments to short haul business and leisure travel and even short term visitors to affected areas being told to self isolate for 14 days. Monday’s market correction was overdue.
None of this should matter to long term investors, Tesla just raised $2.3bn of cash for only 1.5% dilution, equivalent to about 30 weeks of Opex. Well done Tesla.
But not everyone in the market has such a well structured balance sheet (I am largely uninterested what you see in S&P 500 4q’s, look more widely at SMEs and households, and at emerging markets that have been the engine of the last decade’s growth). There is a risk though hard to quantify, that this may yet be the trigger for a wider economic correction. Hope not but let’s see.
Outside of TSLA, personally I intend to ride the gilts and gold I’ve been holding a little longer and in the coming weeks gradually buy back into blue chip companies like APPL and global indices.
As for TSLA, you don’t think I’m selling at these prices do you?
