Analysis of the Effect of COVID-19 on the Stock Market and Investing Strategies

17 Pages Posted: 30 Mar 2020 Last revised: 11 May 2020

See all articles by Binxin Yan

Binxin Yan

University of Illinois at Urbana-Champaign; University of Illinois at Urbana-Champaign

Logan Stuart

University of Illinois at Urbana-Champaign, College of Business, Department of Finance

Andy Tu

University of Illinois at Urbana-Champaign

Tony Zhang

University of Illinois Urbana Champaign

Date Written: March 28, 2020

Abstract

In this paper, we analyze the potential effects that the coronavirus, “COVID-19”, will have on the stock market and then we propose possible ways that an individual could profit off a market affected by a global viral outbreak. We look at past outbreaks and come to the conclusion that often markets will react adversely to these such incidents in the short run but that in the long run, markets eventually correct themselves and increase. In order to profit off of such a market, we propose shorting industries that will be immediately affected by the virus in the short run and then eventually buying back into those industries after their price has dropped significantly. Specifically, we look at the travel industry, technology industry, entertainment industry, and gold as potential areas where great profit can be made.

Keywords: COVID-19, coronavirus, stock market, economy, investing

JEL Classification: G11

Suggested Citation

Yan, Binxin and Stuart, Logan and Tu, Andy and Zhang, Qingquan, Analysis of the Effect of COVID-19 on the Stock Market and Investing Strategies (March 28, 2020). Available at SSRN: https://ssrn.com/abstract=3563380 or http://dx.doi.org/10.2139/ssrn.3563380

Binxin Yan (Contact Author)

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

Logan Stuart

University of Illinois at Urbana-Champaign, College of Business, Department of Finance ( email )

Champaign, IL
United States

Andy Tu

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

Qingquan Zhang

University of Illinois Urbana Champaign ( email )

Champaign, IL 61820
United States
6128406736 (Phone)
61820 (Fax)

HOME PAGE: http://https://giesbusiness.illinois.edu/profile/qingquan-zhang

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