COVID-19 Cuts $1.7 Trillion from U.S. Stock Market Value, But Warren Buffett Says ‘That’s Good For Us’
Stock markets took a hit when COVID-19 began spreading around the world. Asia is perhaps the worst hit, with Japan’s Nikkei stock market plunging 3.3 percent overnight on February 25 and the Philippine Stock Exchange dropping 2.47 percent at the end of February 24’s trading day.
Meanwhile, halfway across the world, the U.S.’ S&P 500 lost an estimated $1.737 trillion in value in two days from February 24 to 25. According to S&P Dow Jones Indices, the economy lost $927 billion in value on Monday, followed by a loss of $810 billion in value on Tuesday. COVID-19 is cited as the main reason investors abandoned their assets in fear of a global economic slowdown caused by the China-originated virus.
This is the largest loss for S&P 500 since August 2015 during a previous U.S.-China trade war. The negative turn of the stock market is proof of the economic ties that bind China and the U.S.
However, billionaire and stock market veteran Warren Buffett of Berkshire Hathaways shared that the ongoing market sell-off might just be what the economy needs.
“That’s good for us actually,” said Buffett, explaining that, “We’re a net buyer of stocks over time. Just like being a net buyer of food—I expect to buy food for the rest of my life, and I hope that the food goes down in price tomorrow.”
According to Buffett, the massive market sell-off is creating more opportunities to buy stocks at a lower price.
"Who wouldn't rather buy at a lower price than a higher price?" Buffett continued. "People are really strange on that. They should want the stock market to go down—they should want to buy at a lower price."
Despite admitting that “a good many” of Berkshire Hathaway’s businesses have been affected by COVID-19, Buffett said people generally “just feel better when stocks are going up.”
Buffett also pointed out that investors must remember to think of long-term results instead of short-term results: “If you’re buying a business, and that’s what stocks are…you’re going to own it for 10 or 20 years.”
As for how his company is reacting to COVID-19’s impact on the global economy, “We certainly won’t be selling.”
COVID-19 Vaccine On the Way
Despite the global fear surrounding COVID-19, there is good news on the horizon. U.S. biotech company Moderna Therapeutics has shipped its COVID-19 vaccine to the U.S.’ National Institute of Allergy and Infectious Diseases, bringing us one step closer to a globally accessible COVID-19 vaccine.
The vaccine was made 42 days after China released the genetic sequence of COVID-19, and human testing will begin as early as April. An antiviral drug called remdesivir is also in the works, and will be the first drug to be tested on COVID-19 patients, and the first volunteer will be a passenger from the Diamond Princess.
A total of 80 Filipinos caught COVID-19 while aboard the Diamond Princess. While the patients will remain in Japan for treatment and quarantine, 445 Filipinos who were also aboard the Diamond Princess have been repatriated back to the Philippines and will stay in the Athletes’ Village in New Clark City for 14 days of quarantine.