Individual investors are calmly buying stocks during the coronavirus panic

Despite the COVID-19 steep coronavirus-induced correction across U.S. markets since late February, individual investors are taking to heart Warren Buffett’s famous axiom, “Be fearful when others are greedy, and be greedy when others are fearful” and calmly buying stocks during the coronavirus panic.

Caleb Silver for Investopedia:

buying stocks during coronavirus panicAccording to trading data from Fidelity Investments and Vanguard, two of the biggest brokers serving retail investors, their clients are showing no signs of panic and adding stocks to their portfolios in the midst of a steep market sell-off that has brought the S&P 500 down close to 20% from its highs of February 19th…

The majority of clients at Vanguard, which manages over $5.6 trillion, moved money into equities as opposed to fixed income, including cash, according to a Charles Kurtz, a spokesperson for the firm… Fidelity Investments, which manages $2.4 trillion in assets, also reported a similar surge in stock buying by its customers. Fidelity saw an equity buy-to-sell ratio of 2.11 to 1 on Monday, March 9th, even though U.S. markets plunged over 7%.

Investors at Fidelity, which publishes its most actively traded2 stocks and ETFs each trading session, have been loading up on some of the most popular stocks like Amazon (AMZN), Apple (AAPL), Microsoft (MSFT), and Disney (DIS), as these mega-caps have seen their shares tumble off of record highs.

MacDailyNews Take: While this is likely to get worse before it gets better, panicked selling will only lose you money, not make it. Of course, it’s nearly impossible to call a bottom, but getting in at a nice low price while “others are fearful” might look pretty good in your portfolio a few quarters out. Hopefully, Apple is executing beaucoup buybacks at discount prices during this period, just as others are calmly buying stocks during the coronavirus panic.

We’re having a panic-induced deep discount sale on Apple just ahead of a multi-year 5G super cycle. It makes a lot of sense to consider buying Apple stock on the coronavirus pullback. — MacDailyNews, February 25, 2020

Be fearful when others are greedy. Be greedy when others are fearful. — Warren Buffett

14 Comments

  1. Linking the drop to Trump’s “plan,” as the article states within, is merely a junk headline. The article then goes on to list the numerous actions taken by businesses to protect themselves from the V. All steps are economically retractive and, as a whole, are “signs” to investors to be alarmed.

    CNBC’s Cramer noted earlier he expected numerous companies in the S &P to declare bankruptcy as a result of this storm. There’s no over-all guardian/protector re: the cause-effect of what’s happening…and the one that was thought to “protect,” –the Fed–is materially involved to creating the weakness. The weaknesses were built-in long before Don.

    1. I find it hilarious how the trump cult here says the media is to blame for any perceived overreaction. But then when the president does a flip-flop and unilaterally locks down international travel (he acts as if a virus is an illegal foreign invasion) without bothering to coordinate with other nations or affected businesses, they say nothing. The hypocrisy knows no bounds.

      By the way, the president claimed that insurance companies would cover all COVID-19 treatment expenses. They were immediate in correcting the compulsive liar: insurance companies stated they will waive the copay for testing only. As always, if you’re uninsured, you’re on your own. This incompetent administration can’t even get these basic healthcare access issues resolved.

      The leading cause of personal bankruptcies in the USA is unforeseen medical expenses. One wonders if Americans will soon have second thoughts about the bizarre tradition of tying comprehensive healthcare insurance to white collar employment. Retirees, the most vulnerable class of citizens, have the worst private insurance choices, and that is why they increasingly prefer Medicare. Gig Economy workers have zero benefits.

      One would think a nonprofit option would be a popular choice nationwide to protect against unpredictable stuff like pandemics and accidents. The insurance lobbyists of course hate competition and there is no end to the propaganda against nonprofit healthcare. Something to think about in the next few months.

        1. Allow me to weigh in.

          In the postwar boom years, large companies in the USA began to offer benefits packages to attract new employees without having to immediately shell out high wages.

          Over time, white collar employees came to expect comprehensive healthcare, which large corporations could offer because their scale allowed them to negotiate reasonable rates from insurers and HMOs. Some blue collar employees got Cadillac coverage too, notably from companies that were awash with cash like automakers.

          Unfortunately as global competition stepped up, blue collar workers lost their leverage. On average, the health care offered to working classes slowly became either less complete or more expensive, since US labor is really competing against Chinese workers for their jobs.

          Big companies also screwed their people with games, knowing that the bottom classes have few alternatives. Companies like Uber pretend their employees are contractors to avoid paying any significant benefits. Walmart declares most of its employees to be part time to avoid paying any healthcare — and many 38 hr/wk Walmart employees thus collect public assistance. Those low ranking workers who lose their jobs (for injury for example) are almost always cut loose, left to be cared for by family, church, or public welfare. Thousands of them with mental issues simply became homeless bums, you see them now in every major city. These people could never afford the health care they need to get straight, and thus will always be a drag on governments who try in vain to patchwork some semblance of a safety net together.

          Small companies, even if they try to cover employee healthcare, have little bargaining power with the large healthcare middlemen. Small independent business professionals like physicians band together through their professional associations (AMA) to negotiate better insurance rates.

          What I observe is this: in the USA many people stick to jobs they hate because they know that if they were fired or went to start their own businesses, they would have horrible healthcare options at insane prices. Those who know they need to invest in health avoid doing so until a condition is truly an emergency. Youth think they don’t need insurance at all. Elderly rely increasingly on Medicare because on average their retirement savings seldom covers the price of private insurance.

          YMMV, but that is the lay of the land as I see it. As the USA ages, the for-profit healthcare middlemen cannot continue to call the shots. It would absolutely save everyone money and sanity to have a national basic minimum insurance plan option, and it could be run as a nonprofit cooperative like many hospital systems are. Voters simply have to stop listening to the entrenched leeches who have scammed healthcare consumers for decades.

          1. Thank you so much for your articulate and thoughtful response. I would like to use on my FaceBook page. Not explicitly stated is the employers’ refusal to increase wages to offset their reduction of benefits which undermines the original contract negotiated with unions to which both agreed.

  2. Last night’s DOW Futures fell 1,100 following the President’s speech. It was his inability to offer a plan that spooked the markets. Defend him all you like, but most everyone recognizes the man is way out of his league. He’s perfect for big time wrestling, but not the White house.

    1. APPL is up nearly 12% today and numerous tech companies are up 15-20%.

      If Trump’s words were MATERIAL to the fall, please explain the gain?

      The point: the market is an impetuous juvenile that’s acting completely irrationally.

      1. Ronner, the announcement that Munchin was negotiating an aid package to be imminently passed by the House had a very big impact on the market. Everyone loves stimulus now.

        The market today more than ever is driven by automated trade triggers. Emotion and fear is what closes businesses and airports and stuff. Large market traders are almost always reactionary and model-driven.

        So the confused messaging from the feds is indeed whipsawing the market. Businesses can’t offer high confidence investor guidance at all.

  3. I’m in no way defending him personally, but to attribute the fall primarily to Trump is is absolutely no different than your position that attributes my words as a defense of Trump.

    The market is like a person awaiting the worst and will use ANYTHING to confirm their next move…positive, or negative. With that said, as a “glass-half-full,” the market’s ear is more ready to adopt the negative news.

    Let’s not forget…just a few days ago the market dropped significantly because of the Fed’s drop in rates. For years, such a move has assuaged and calmed the markets, as it’s most often been hope inducing. With the glass-half-full mindset, it was seen as just the opposite. “Things must be really bad,” concurred the market.

    There’s no country leader that’s “in the league” at this time. Controlling the beast isn’t a “snap of the finger” measure. The beast is calling the shots at this point and has been for years…in-spite of it appearing as a “merry-time.” The problem is deep and systematic and the solution is beyond ANY measure so far introduced.

    1. Ronner, please tell us what prompted the futures to flip from a positive trend to immediately downturn after the presidential speech?

      Not only does this president not have his facts straight, he wants to close the barn door after the critters have already infested it. There is no question that the latest sell off was prompted by the POTUS.

  4. As I said, the market awaits ANYTHING to make its next more. It’s like an irrational juvenile. Did you miss my words in comparison to the result of the Fed’s recent actions?

    If you think any man’s words at this time are going to magically set things straight, continue to enjoy the magic carpet ride. But, you need someone to blame…I understand, there’s a lot of such posturing out there. It’s human nature.

    This is larger that one’s man’s words and I am not unaware of Trump’s mumblings

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