Not only are stock prices falling all across the board today, but oil has also plunged downward today. The reason appears to be the rising COVID cases around the world. The slowing of travel and leisure spending have caused the oil markets to tumble this morning, as any resemblance of a return to normal life has disappeared. What will cause these falling prices to continue falling is the notion of more COVID cases and a delay in vaccine production.
The question really should be: why were oil and stock prices high enough to fall in the first place? Sure, some people have begun traveling again, but very few have done it leisurely. Stocks and oil returning to their pre-COVID levels will only occur once we are officially clear of COVID. If they return to normal before COVID is gone, then the market is inaccurate and this should be a red flag to investors.
And it makes sense when you think about it: why should the price of oil be as high as it was when everyone was traveling normally? It shouldn't. Because less people are using it and we keep producing more of it, so there is a higher supply than demand: the price should go down. If it doesn't, the market is inaccurate. And this same principle can be used for stocks as well!
As investors, we need accurate information in order to determine the best ways to use our capital. If we act on wrong information, we'll make the wrong investments which could lose our money.
The best thing an investor can do in this moment is to be patient. The post-COVID world will thrive, and the 2020s will absolutely outpace the 2010s and the 2000s in terms of technological innovation. The world will change faster than we've ever seen before, and there will be numerous fantastic investment opportunities. Be ready, hold lots of cash, and when the times comes you can blast out the gate guns blazing.