How Omicron Variant Poses a ‘Very High’ Threat to Your Investment Portfolio
The World Health Organization (WHO) says the new variant, Omicron, which was first detected in South Africa in November, is likely to spread internationally and poses a “very high” global risk.
The omicron variant has also led to travel restrictions.
Economists at Morgan Stanley say the new strain posed “a near-term risk” to their view of how the market could do in Asia.
Since March of 2020 — when COVID-19 hit the U.S. and the S&P 500 dropped 12.5% over the course of the month — there has been a close relationship between which investments do well across all financial markets and whether virus cases are trending up or down.
On Friday, the Dow Jones Industrial Average had its worst day of the year as investors, and the S&P 500 and Nasdaq Composite slipped as investors got spooked by the Omicron variant.
While stocks rebounded Monday, there’s no way to say for sure how much the new variant will continue to impact the market.
Sam Stovall, chief investment strategist at the investment research firm CFRA Research, wrote in a research note Monday reminding investors that the severity of the new coronavirus variant could take weeks to assess.
That said, the groups likely to be hit hardest include airlines, hotels, restaurants and leisure facilities in general, he wrote. There may also be some sectors that benefit in the near-term, like online retailers, food delivery firms and remote communications companies, Stovall says.
Investments that aren’t traditionally defensive, like cyclical stocks, small-cap and international stocks, could benefit from COVID-19 cases coming down.
Markets can be volatile, but a well-diversified portfolio and a long-term investing plan is the best way to keep it safe.
Market is unpredictable and defensive stocks might not hold up as well usual because of the uniqueness of COVID-19, it’s best to always have an all-weather portfolio.
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