What’s Going On Here?The Philippines announced it was shutting down the country’s stock, bond, and currency trading markets on Tuesday, even as the world’s biggest financial markets keep ticker-taping along. What Does This Mean?In an apparent response to the coronavirus, the Philippines broadened its social and economic lockdown to include the country’s financial markets (though they’ll reopen on Thursday). The country likely wanted to stop local investors from panic-selling, which might sound familiar to China’s investors: the Chinese government kept financial markets shut when it extended the Lunar New Year holiday back in February. US investors might know the feeling too, given that its stock market shut down after 9/11.
A major argument against a closure like this is that it could lead to even more panic: it’s perhaps more comforting to know a share price is falling than to know it’ll eventually drop by some unpredictable amount, after all. And while most companies are simply hunkering down and trying to survive right now, the “liquidity” offered by open markets means they can at least try to raise money if they need to. Why Should I Care?For you personally: Short-term cash versus long-term gains.
Despite short-term market moves, investing’s all about growing your pot of money in the medium term (say, three to five years) and long term (five years and more). With that in mind, it shouldn’t be much cause for concern if your local financial markets close temporarily. But if you are going to need immediate access to your cash, you’d be better off keeping that cash away from incredibly volatile stock markets altogether.
For markets: Make a warehouse a warehome.
Picking individual stocks that have fallen in value in the hopes they’ll rise is risky business, but analysts at Wedbush are all in: they recommended buying shares of companies like Facebook, Peloton, and Amazon on Tuesday (tweet this). And with Amazon reportedly hiring 100,000 new warehouse workers due to rising demand, they’re probably feeling pretty pleased with themselves. | 