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Will Fears over Covid-19 trigger a market crash?

Debate Information

Unless you live under a rock or don't trade stocks for some reason, you will be aware that the Dow Jones industrial average has recently suffered it's largest single day drop in US history. This drop seems to have been triggered due to fears over the Covid-19 or Corona virus which has spread throughout much of mainland China and is currently spreading through the US, Europe and several other countries.

The Dow has reached record highs in 2019 and early 2020, however we are overdue for a market correction. Typically we see a market recession every 8-15 years, and larger depressions every 100 years or so. Many considered the 2008 crash to be a considerable depression. Since then the banks which caused the crash have been bailed out multiple times, instead of being allowed to be put out of business as the free market would normally dictate. Should it be discovered that these institutions have engaged in any kind of irresponsible trading or financial practice, then these assets (which have no real tangible value) which have been refinanced with American tax dollars could be brought down, taking everything else with them.

There are other very real reasons that a market crash followed by a global depression could occur. A slow down in trade between China and the US could be a major trigger. If the US starts to import less from China due to Corona virus fears, then that means that businesses that depend on those imports to make a profit will not be able to do business, resulting in an overall slowdown of trade. If individuals start selling off market assets to try and make up the difference, this would cause a major drop in price, because these assets are not worth as much as they are traded for in the stock market, having largely inflated or "invented" value, ultimately triggering a market correction.

However, despite all of this, the market might still stabilize as a result of Covid-19 being little more than a nuisance, and the market will stabilize as a result of the virus being contained or not as bad as originally anticipated. If this is the case, then prices may rise back to what they were prior to the recent drop.

Will the Stock market crash due to fears over Covid-19?
At some point in the distant past, the universe went through a phase of cosmic inflation,
Stars formed, planets coalesced, and on at least one of them life took root.
Through a long process of evolution this life 
developed into the human race.
Humans conquered fire, built complex societies and advanced technology .

All of that so we can argue about nothing.



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    Arguments


  • MayCaesarMayCaesar 5970 Pts   -  
    Stock market is highly unpredictable, and dips like this in themselves are not an indication of anything. You have to look at larger trends; if Dow Jones keeps dropping consistently for, say, a month, then we will be able to say something about the state of the economy, and only of a very narrow aspect of it at that.

    One of the biggest mistakes people make when stock-trading is trying to "predict" the market. While such an approach may get you some positive results, in the long run it is a losing strategy. All attempts to model market behavior have failed miserably, and unless you are using top-notch neural networks coupled with automatic news analyser running on a supercomputer, you might as well be flipping a coin and analysing the future based on what you get.

    The correct strategy giving you small, but steady gains seems to be to just follow a set of rules that empirically have been proven to work more often than not. Do not think about what the market is likely to do; look at patterns and the results they give you. Many patterns that have worked for people well do not actually seem to have an easy interpretation in terms of the market behavior; they just work and that is it.
  • PlaffelvohfenPlaffelvohfen 3985 Pts   -  
    Well,  at 15:30 ET, Oil barrel lost 25%, The Dow has fallen 8.1%, tumbling more than 2,100 points in a single day. If it closes at that level, it would be the worst day for the Dow since October, 1987.
    The S&P 500 fell by 7.7%, blowing through the first circuit-breaker level that it tripped minutes after trading opened for the day. The S&P 500 is on pace for its worst day since December, 2008, when stocks fell by just over 9%.
    The Nasdaq was down "only" 6.7%.... 


    And it's not just the "fear" of the virus that causes problems, the virus in itself is a big problem, China is basically "on hold" at the moment, the productivity is down (although it seems to be restarting now, how fast will it get back to full throttle is another thing), affecting the world's supply of cheap sh*t... It will take a few weeks or even months before things return to normal, by then many will have suffered economically from this, business will close... At least, those who depend too much on China's manufacturing infrastructures and cheap labor...

    The positive thing about it, maybe that it clearly demonstrates how fragile it is to depend on other countries to manufacture most of our goods... 
    Happy_KillbotZeusAres42
    " Adversus absurdum, contumaciter ac ridens! "
  • Happy_KillbotHappy_Killbot 5557 Pts   -  
    @MayCaesar
    I have to disagree that the stock market is completely unpredictable, because it is still based on physical aspects of the market which are themselves going to exist in response to reality. For example if China shuts down then trade value between the US and China will go down, and markets that rely on those imports will suffer. That is perfectly predictable, what isn't predictable is when and where these types of events will occur.

    For the above reason specifically, I sold most of my stocks at the end of January, specifically because it looked like we were going to see a turn that didn't actually happen until about three weeks later, although I can't say I regret doing what I did

    You can also predict long term trends on average, for example just after a recession if you buy a lot of stock it will almost definitely go up, and if you buy when there hasn't been a recession in a long time, it will go down. The index has outperformed every stock on average, and almost always outperforms any actively managed accounts, which is one of the main reasons I primarily trade in the index.

    The other way that you can predict stock rises is to actively look for new companies to invest in, although this requires a lot of work and research. If you find something good though, it can be very much worth it in the long run. This is different from trading on the stock market though. If you invest in enough companies, or just get lucky, then you will make gains that are anything but slow and steady using methods that are empirically shown to work.
    PlaffelvohfenZeusAres42
    At some point in the distant past, the universe went through a phase of cosmic inflation,
    Stars formed, planets coalesced, and on at least one of them life took root.
    Through a long process of evolution this life 
    developed into the human race.
    Humans conquered fire, built complex societies and advanced technology .

    All of that so we can argue about nothing.
  • JGXdebatePROJGXdebatePRO 408 Pts   -  
    This debate is a bit late, seeing as there has been a 2 percent market crash over COVID-19 worries.
    TGMasterX
    “The best revenge is not to be like your enemy.” – Marcus Aurelius
  • TGMasterXTGMasterX 163 Pts   -  
    Yes, there already has been. The biggest market crash since Black Monday.
    JGXdebatePROxlJ_dolphin_473CYDdharta
  • xlJ_dolphin_473xlJ_dolphin_473 1712 Pts   -  
    TGMasterX said:
    Yes, there already has been. The biggest market crash since Black Monday.
    That is correct. It is very unstable as well, as after by falling by 10%, it then rose again by 8%, and then fell back by another 6% by the end of the day. That said, it is a good time to buy shares in hand sanitiser manufacturing companies.  :D
  • RickeyDRickeyD 953 Pts   -  
    President Trump, through tax cuts and reduction in government regulations on new construction, manufacturing and the energy sector, has set America upon a solid foundation economically and our economy is strong and robust; therefore, the volatile stocks, the S&P 500, may dip and the circuit breakers warm but America will be OK. The worst thing investors can do is panic and move their money around in an environment of chaos...stay the course if you're invested well and you should be fine. God Bless President Trump for a job well done!


    TGMasterXBlastcat
  • MayCaesarMayCaesar 5970 Pts   -   edited March 2020
    @RickeyD

    How does you vilifying Islam in other threads and claiming that all Muslims are going to have a terrible fate in the afterlife go along with you posting a picture of Trump befriending the leader of the most influential Islamic theocracy in the world with praise?

    I mean, to me there is nothing wrong here, but I wonder how you reconcile all those things in your mind.
  • RickeyDRickeyD 953 Pts   -  
    @MayCaesar ; My President is simply seeking peace with the demons of Islam in hopes of establishing security for Israel and bringing our young men home from pointless wars and oversight in Syria, Afghanistan, Iraq. President Trump is acting diplomatic while carrying a big stick and he is doing so in the interest of the American and Israeli people.

    Islam is Satan's/Allah's representative in Time...this is why the Progressive-Socialist-Democrat runs to Islam's defense and why these demons serve in our Government under the banner of "Democrat." You are representative of this demonic hoard as well in your atheism and you serve Satan in your unbelief, unaware (John 8:44). You do not understand that Islam-Iran/Allah and his allies, Russia-China-an Arab coalition, will come against Jerusalem, Israel in the coming days and this assault on the Israeli people will initiate the coming Apocalypse that will initiate the Millennial Reign of Messiah-Yeshua. A coming nuclear war prophesied by the prophet Zechariah vividly articulating the horrors of nuclear war thousands of years before the splitting of the atom. You do not understand the hopelessness of the ideology that has consumed you and the futility and meaninglessness of your life in Time and Eternity due to your spiritual ignorance and rebellion to Jesus Christ-Yeshua!


     
    Blastcat
  • MayCaesarMayCaesar 5970 Pts   -  
    @RickeyD

    So negotiating with the servants of satan is a good thing now? Interesting take on the Bible.

    So what will you do if the "coming nuclear war" never actually comes? Will you eat your words, or maybe your book, with a fine ketchup topping?

    I am actually on Israel's side; it is the only more or less civilised state on the Middle East as far as I am concerned. But I am a villain now because I am atheist? For that matter, people of Israel do not even follow the same religion as you; they follow Judaism, and their holy book is Torah. Why are you so concerned with the fate of heretics suddenly?
  • CYDdhartaCYDdharta 1823 Pts   -  
    TGMasterX said:
    Yes, there already has been. The biggest market crash since Black Monday.

    There was also the largest market gain in US history.
    TGMasterXBlastcat
  • RickeyDRickeyD 953 Pts   -  
    @MayCaesar Negotiating with the servants of Satan within the Realm of Time is mandatory when the lives of 320-million Americans and the existence of the Nation of Israel weighs in the balance. You, in your atheism, are an enemy of my Lord and therefore you are my enemy as well...I am commanded to show you love; therefore, I tell you of life in Jesus Christ by grace through faith...this is done because I love and respect my Lord.

    Israel is under God's wrath for their rejection of Yeshua and though they were set-apart as God's "chosen" through whom He brought forth Messiah-Yeshua, only a remnant of Israel will be saved. If God is not sparing those He considers the apple of His eye due to unbelief, what will He do to the atheist who mocks the Son? 




    Blastcat
  • TGMasterXTGMasterX 163 Pts   -  
    @CYDdharta
    That was DT words, which aren't very reliable.
    However, there was a market gain. However, the increase was minuscule compared to the crashes that occurred before and after.
    Although your point was valid, it was by far, not the most significant gain.
  • DeeDee 5395 Pts   -  
    @RickeyD

    *****Negociating with the servants of Satan within the Realm of Time is mandatory when the lives of 320-million are at stake 

    Right and he does that by signing a 390 billion arms deal with Saudi  hows that work buddy?
    Blastcat
  • A plunge is not a crash two or more things must collide in a crash.
  • CYDdhartaCYDdharta 1823 Pts   -   edited March 2020
    TGMasterX said:
    @CYDdharta
    That was DT words, which aren't very reliable.
    However, there was a market gain. However, the increase was minuscule compared to the crashes that occurred before and after.
    Although your point was valid, it was by far, not the most significant gain.

    According to you, my point was valid, yet you marked it as a fallacy?

    The 4 largest Dow gains and 3 largest losses in history have occurred since the beginning of March.  Altogether, they add up to a loss of 211.75 points.  The current average is 23185.62.  The day Pres. Trump was inaugurated, the average was 19732.4.  That's a 3,453.22 point gain over the 0bama economy that has been heralded by Dems and leftists.

    Blastcat
  • Happy_KillbotHappy_Killbot 5557 Pts   -  
    @CYDdharta Are you arguing that market volatility is somehow a strength?

    Or are you trying to argue that despite the recent recession (which IMHO is only just getting started) the Stock market has been overall better under Trump? 
    Plaffelvohfen
    At some point in the distant past, the universe went through a phase of cosmic inflation,
    Stars formed, planets coalesced, and on at least one of them life took root.
    Through a long process of evolution this life 
    developed into the human race.
    Humans conquered fire, built complex societies and advanced technology .

    All of that so we can argue about nothing.
  • CYDdhartaCYDdharta 1823 Pts   -  
    @CYDdharta Are you arguing that market volatility is somehow a strength?

    Or are you trying to argue that despite the recent recession (which IMHO is only just getting started) the Stock market has been overall better under Trump? 

    I'm saying that the market scare isn't nearly as bad as people are making it out to be.
    Blastcat
  • Happy_KillbotHappy_Killbot 5557 Pts   -  
    @CYDdharta That's a very relative opinion. Obviously it is going to be very bad for some people, and not so bad or even beneficial for others. If we didn't know what to do, we would be lost and confused, but because we have dealt with this type of situation before we are better prepared to deal with it, however if steps are not taken then it doesn't matter.

    Make no mistake, before all is said and done this will almost definitely be one of the worst market crashes in US history, but recovery should be relatively quick should the damage be limited. Already the government is taking the steps necessary to limit the economic fallout and control the damage. Businesses will close their doors and people will be out of work for months all across the world. Global trade will slow to a minimum, as xenophobia and isolationist policies will limit the return. The overall standard of living will decrease, and people will move to accept larger more expanded government. The US federal debt will rise sharply. The rich will grow richer, and the poor will grow poorer.

    What I intend to address with this debate, is if my assumption that recovery should be quick because of steps taken to limit the damage and the virus being little more than a temporary inconvenience, or if that assumption is misplaced for some unforeseen reason such as the US federal debt being so high that it doesn't warrant taking out new federal loans to pay for stimulus programs.
    At some point in the distant past, the universe went through a phase of cosmic inflation,
    Stars formed, planets coalesced, and on at least one of them life took root.
    Through a long process of evolution this life 
    developed into the human race.
    Humans conquered fire, built complex societies and advanced technology .

    All of that so we can argue about nothing.
  • CYDdhartaCYDdharta 1823 Pts   -   edited March 2020
    @CYDdharta That's a very relative opinion. Obviously it is going to be very bad for some people, and not so bad or even beneficial for others. If we didn't know what to do, we would be lost and confused, but because we have dealt with this type of situation before we are better prepared to deal with it, however if steps are not taken then it doesn't matter.

    Make no mistake, before all is said and done this will almost definitely be one of the worst market crashes in US history, but recovery should be relatively quick should the damage be limited. Already the government is taking the steps necessary to limit the economic fallout and control the damage. Businesses will close their doors and people will be out of work for months all across the world. Global trade will slow to a minimum, as xenophobia and isolationist policies will limit the return. The overall standard of living will decrease, and people will move to accept larger more expanded government. The US federal debt will rise sharply. The rich will grow richer, and the poor will grow poorer.

    ...and that is your opinion, which I find ridiculous.  This is going to be sorted out in short order, and the markets will stabilize, then rebound, as soon as a treatment and/or vaccine is dispensed.  The weeks between now and then will be turbulent for the markets, but it will hardly be a catastrophe for the economy.  The rebound will be swift and impressive.

    What I intend to address with this debate, is if my assumption that recovery should be quick because of steps taken to limit the damage and the virus being little more than a temporary inconvenience, or if that assumption is misplaced for some unforeseen reason such as the US federal debt being so high that it doesn't warrant taking out new federal loans to pay for stimulus programs.

    There will be some economic assistance for industries that are particularly hard-hit, like entertainment, vacation, and transportation industries, but it won't result in any significant or lasting damage to the economy.
    Blastcat
  • Happy_KillbotHappy_Killbot 5557 Pts   -  
    @CYDdharta I mean, it has already been a catastrophe for the economy, that is water under the bridge, not an opinion in any way. (Don't believe me go try to buy toilet paper and hand sanitizer)

    A vaccine isn't going to be ready for human use for at least a year (if it is less than that I wouldn't want it anyways), and as long as people are self-quarantining the way they are, then we should expect a very "slow burn" on the spread, that is to say the virus should be spread through each population much slower than we might normally predict, basically meaning it never goes away. This means that the economy is probably going to be in disorder for a long time unless people brighten up and sacrifice I mean protect the elderly who are most at risk then go on to get sick and get over it.

    Just out of curiosity, why do you think the entertainment industry will suffer? I feel like if people are staying home movies and especially streaming services will do very well.
    At some point in the distant past, the universe went through a phase of cosmic inflation,
    Stars formed, planets coalesced, and on at least one of them life took root.
    Through a long process of evolution this life 
    developed into the human race.
    Humans conquered fire, built complex societies and advanced technology .

    All of that so we can argue about nothing.
  • CYDdhartaCYDdharta 1823 Pts   -  
    @CYDdharta I mean, it has already been a catastrophe for the economy, that is water under the bridge, not an opinion in any way. (Don't believe me go try to buy toilet paper and hand sanitizer)

    A vaccine isn't going to be ready for human use for at least a year (if it is less than that I wouldn't want it anyways), and as long as people are self-quarantining the way they are, then we should expect a very "slow burn" on the spread, that is to say the virus should be spread through each population much slower than we might normally predict, basically meaning it never goes away. This means that the economy is probably going to be in disorder for a long time unless people brighten up and sacrifice I mean protect the elderly who are most at risk then go on to get sick and get over it.

    Just out of curiosity, why do you think the entertainment industry will suffer? I feel like if people are staying home movies and especially streaming services will do very well.

    Panic buying is hardly a sign of damage to the economy.  Want toilet paper or hand sanitizer? That's easy, just go when the stores open in the morning.  The shelves might be empty at night, but they're full again the next morning.

    Perhaps you won't want a vaccine in a few weeks when it's ready, but most people who are terrified about the disease will be clamoring for it.  The markets will stabilize and rebound.  Self-quarantining is guaranteeing that the spread of the disease is minimal.  It will be much easier to control, and immunization programs will be much more effective than if it were wide-spread. 

    The entertainment industry is already suffering.  I was thinking of sporting events and concerts, but even movie theaters are limiting ticket sales.
    Blastcat
  • Happy_KillbotHappy_Killbot 5557 Pts   -  
    @CYDdharta There isn't going to be a vaccine in a few weeks, even if some convenient vulnerability in the actual pathogen allows for rapid production of a vaccine, an effective cure is developed, tested in animals, tested in humans, and finally mass produced, we would still expect it to be months before we saw anything available. It is possible that the virus will completely run its course before a vaccine is developed, this is what happened with the SARS outbreak in 2003.

    That is months of people staying at home and trying their best to avoid public places. That means less buying of products, less going out to eat, and less spending in general. 70% of the US economy is just consumer products. Even just seeing a 1% decrease would be an economic disaster, but I think it is reasonable that we will see much more than that.

    I am not arguing that the economy is going to settle out at a new low or anything ridiculous like that, I just don't see how this is going to be resolved without the US taking on massive amounts of debt that will burden our nation for decades. That is what we should really be talking about here.

    Thank you for clarifying what you meant about the entertainment industry suffering.
    At some point in the distant past, the universe went through a phase of cosmic inflation,
    Stars formed, planets coalesced, and on at least one of them life took root.
    Through a long process of evolution this life 
    developed into the human race.
    Humans conquered fire, built complex societies and advanced technology .

    All of that so we can argue about nothing.
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