hi I'm Jimmy in this video we're looking at how the coronavirus is impacting the
investing landscape ideally we want to identify potential pitfalls that are
created by the corona virus as well as potential investing opportunities where
could they be hiding and hopefully we can use this knowledge to get us closer
to our personal goal of financial freedom okay so I'm sure we all know
that the corona virus is a virus that has been dominating headlines and it
looks like it originated in China and it has spread to a couple dozen countries
now I took this map straight from Bloomberg comm and I know that it says
right here that there were almost 1,400 deaths related to the corona virus but I
believe that since then we've now passed the 1,400 mark now this data map is from
yesterday morning just so we're all on the same page so in reaction to this
rapidly spreading virus China has shut down many businesses and they're
restricting the movements of many people within China especially in the Wuhan
region and obviously this is going to hurt the global economy since China is
the largest manufacturer in the world and their ability though or their
manufacturing ability once it's been cut off or clearly that's going to restrict
the supply of many other businesses that count on Chinese products to either
build their own products or to resell to the rest of the world's economy so
broadly speaking this has the potential to really hurt the global economy
depending on how long the coronavirus goes on for how long do things stay shut
down now the impact of how is slowing in China can ripple through a lot of the
world's economy can largely be seen in this dry bulk index and as we could see
this index is really tanked recently so what does this mean well many investors
look at this index to see if it's rising or falling and they use that to try to
predict the future growth of the economy so this index tracks dry bulk shipping
which includes products like coal iron or grains and a bunch of other things
along those lines so in theory if less of these commodities are being shipped
well down the road at some point there's likely to be a slower growth in the
broader economy now this index is actually try
the cost of shipping and it's a blend of three other indexes it tracks the cost
from three different ship sizes the largest is Capesize this is the
capesize index and we could see that this index actually went negative for the
first time at the end of January and it remains negative today this tells us
that shipping companies are losing money with the Capesize ship now the
capesize index going negative isn't 100% related to the coronavirus although that
is playing a huge role in but in 2020 the International Maritime Organization
implemented new rules that require cargo ships to use better fuel and that
ultimately have a meaningful impact on what it costs to ship products so
clearly that's gonna add a ton of pressure to the Cape size index compile
combine that with the dramatic reaction to the coronavirus and prices are going
to be forced lower due a lack of demand since nobody's really shipping anything
right now and once again China's largest manufacturer in the world so if they
even slow down shipping well you're gonna you could end up with a negative
Cape size index now for curious they call this ship the Cape size ship
because it is too big to fit through I've the Panama Canal or the Suez Canal
and it's forced to go around either Cape Horn or the Cape of Good Hope hence the
name Cape size the next piece of the broader dry bulk index is the Panamax
index now clearly this ship size has also taken a hit in the wake of the
Corona fires and once again they call this ship the Panamax ship because it's
the largest ship allowed to pass largest sized ship a lot to pass through the
Panama Canal okay simple enough once again they've taken a beatin then the
third and final ship size that's representing the dry bulk index is the
Suprarmax index now this the Supramax ship usually carries smaller sized
products but it goes on to more ports and they have some advantages because
it's it can do things that the other two ships are too big to do clearly this
index is once again the beaten down thanks to partly the coronavirus they
are also implement they're also vulnerable to the new rules
the IMO or the International Maritime Organization but the coronavirus is
really leading a lot of this okay so what does this mean for us investors
well clearly the broader dry bulk index is calling for a pullback in the economy
and this has the potential to ripple through much of the world's major
economies now some companies are going to be more vulnerable in the short term
than others for example Carnival Cruise is down about 16% year-to-date
then United Airlines is also down about 10% unity now our question with
companies like this or really any company impacted by the coronavirus
which is clearly frozen a lot of production and severely restricted
travel well the question is do we think that this is temporary and if we do then
perhaps these pull back instead perhaps the pull backs in stocks like this
really presents us with an opportunity assuming that we like the companies
maybe this is the opportunity to buy it at the price we've been waiting for a
few other companies that have been hurt by this is Royal Caribbean there are
another cruise lines similar to Carnival then they have Renault which is Renault
is a car manufacturer they trade in France they're down about 20% since all
this started Fiat Chrysler is almost down 10% so clearly there get will they
are on the they were on the receiving end of products manufactured generally
in China then some real interesting companies are actual dry brought bulk
shippers good example of this is the novios maritime partners ticker symbol
NMM they're an international dry bulk shipper and currently thanks to this
huge drop in the stock price or they have a dividend yield of more than 10%
now I haven't done a deep dive into this company in a few years I used to cover
this one a while back so I'm not a hundred percent sure that this is in
fact an opportunity but this might be worth us doing a deeper dive let me know
if you in the comments below if you think this is one of those or other dry
bulk ship this is a few of them out there if you're interested in that let
me know in the comments below if you know anything about it put those in the
comments below because maybe this is a great opportunity so that's something we
should watch for then there's other companies companies like Tesla which is
doing quite well Apple which is also doing quite well since all this happened
and we know that they manufacture a lot of stuff in China but for some reason
that really hasn't hurt the stock so far so I think
the smartest thing for investors to do is to use this pullback in various
companies as the potential opportunity to buy these companies at better prices
the first question is do we think that coronavirus is temporary now personally
I think it's 10 well I hope it's temporary and assuming that we do think
it could be temporary well that how's that going to affect the
companies it's going to affect different companies differently but overall are
those that's likely to be a short-term impact on that company so right now
we're in the first quarter so a lot of companies first quarter earnings could
get hurt by this and if that does happen perhaps some companies pull back even
further as earnings start to come up so you might end up with weaker first
quarter earnings but then on the flip side of that is that if you end up with
week of first quarter earnings in 2020 well when the for first quarter in 2021
comes out you're going to have easier numbers to beat you're your growth is
going to look better thanks to a temporary dip in earnings - what we are
hoping is a one-time impact of the coronavirus so that could end up setting
up a lot of companies to be a good long-term buy and hold now if you not
sure what stocks are best to look at like she did a video called the art of
finding great long-term stocks so if you're curious that could be a good next
video for you to watch there's a link here there's a link in the description
below and thank you so much for sticking with me all the way into the video I
really appreciate it thanks and I'll see in the next video