Analysis of the Effect of COVID-19 on the Stock Market and Investing Strategies
17 Pages Posted: 30 Mar 2020 Last revised: 28 Nov 2022
Date Written: March 28, 2020
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: Suggested Citation