by Gary Alexander

March 10, 2020

So far, the coronavirus has killed around 3,000 people, mostly in China, and a handful in America, yet the stock market here has responded with its fastest-ever (7-day) 10% correction, and numerous after-shocks.

A decade ago, far worse catastrophes hit China and America, yet growth was not hindered, there or here:

  • In May 2008, an earthquake struck Sichuan province, China’s crowded central province, killing 87,587 (plus over 18,000 missing), but despite the worst earthquake in China since 1950 and a global recession that sent stocks down worldwide, China’s GDP kept growing at a +9.65% pace in 2008.
  • In April 2009, the “swine flu” (H1N1) entered America from Mexico. By March 2010, according to the CDC, an estimated 59 million Americans contracted H1N1, with 265,000 hospitalized and 12,000 Americans dying from the flu, yet the S&P 500 gained 34% from April 1, 2009 to April 1, 2010.
  • Two years ago, the 2017-2018 U.S. flu season infected 45 million Americans and killed 61,000 of us, yet there were no scary daily headlines about those flu deaths, nor any flu-related stock market panic.

Opposing Responses to Swine Flu and Corona Virus Image

Just a hunch, but could the 2020 press panic and resulting market panic be blamed on the fact that (1) we were at an all-time market high on February 19, 2020 and the market was looking for an excuse to sell (vs. no flu panic in 2009, when we were coming out of a bear market and Obama was President)? Or was it that (2) the press respected President Obama, while the press is at war with Trump (and vice versa)?

Either reason seems irrational or, as my headline calls it “senseless.” But beyond this seemingly irrational response to a still-little-understood virus, there is a much better-understood virus spreading in America.

Another Kind of Virus May be Haunting the Stock Market

Everyone is blaming this stock market malaise on the coronavirus, but I’ve shown you that previous flu outbreaks did not cause a stock market collapse. Could there be another virus? Consider this timeline:

  • The market collapse began on Monday, February 24, the first trading day after Bernie Sanders’ surprisingly strong win in the Nevada caucus, beating Joe Biden, 47% to 20%. Bernie’s big victory in Nevada gave him confidence to come out of the closet and praise Castro a bit too much for most voters’ tastes. In a town hall meeting on February 24 – the day the market carnage began – Sanders said the first thing Castro did when coming to power was to start a major literacy program (Bernie ignored the killing and jailing of dissidents). He praised China for bringing millions out of poverty while ignoring their previous killing of tens of millions in famines and work camps. That week, the market began its fastest-ever 10% correction, falling that far in just a little over six trading days.
  • Next, examine the stock market’s strong recovery on Monday, March 2 (+1,293 Dow points), the first trading day after Joe Biden won South Carolina over the weekend, and then on Wednesday, March 4 (+1,173), after “Super Tuesday,” when Biden won nine states to only three for Sanders. However, the market soon realized that Sanders had won America’s most populous state, California, and Biden’s wins were concentrated in the Deep South, so the market belatedly realized that Sanders is still a viable candidate – causing the market to drop sharply on Thursday last week.

Today, we have Democratic primaries in six states, led by Michigan (125 delegates), Washington (89), and Missouri (68). I know for certain Bernie will take my Washington county in a landslide. He may take my state, and if he wins Michigan, look for a big down day Wednesday, and more volatility as four big primaries arrive March 17. As with Trump in 2016, pundits don’t give Sanders much chance of winning, but he has a loyal base and could pull off the upset – like Trump did in 2016 – so the market is skittish.

That’s at least a viable theory – as viable as the coronavirus theory – to explain why this market is so volatile now. Sanders’ campaign is still alive and well and could overtake the cognitively challenged Joe Biden for the Democratic nomination. There is no question that Bernie is a firebrand zealot in full command of his senses, unlike his more centrist challenger, who is favored by the Party machine.

Coronavirus will eventually go away, but socialism is a virus that won’t go away. An extreme version of the flu killed millions in 1918-19, but extreme versions of socialism killed over 100 million since then.

10 states to watch in the next week of Democratic primaries:
March 10: Idaho, Michigan, Mississippi, Missouri, North Dakota, Washington
March 17: Arizona, Florida, Illinois, Ohio

If Bernie is effectively out of the picture after March 17, and new coronavirus cases are peaking, I predict a strong market rally in the spring, but win or lose, Bernie has moved the goalposts for America’s future.

The current New Yorker contains a book review of French economist Thomas Piketty’s new book, Capital and Ideology, a sequel to his huge 2014 tome, Capital in the Twenty-first Century. (The book is so large that reviewer Idrees Kahloon admitted, “The 1100-page work broke an (admittedly unsteady) card table and later caused a carry-on to exceed the weight limit on an (admittedly stingy) European airline.”

The reviewer’s following paragraph encapsulates the creeping socialism of Sanders and Warren. It also reminds me of a frog slowly boiling in hot water; the frog doesn’t notice the rising heat until it’s too late.

“In ‘Capital in the 21st Century,’ Piketty made a policy proposal that, he cautioned, was probably ‘utopian’: a global tax on wealth topping out around 2%. Half a dozen years later, it seems almost like milquetoastery. The signature idea of Elizabeth Warren’s Presidential candidacy is a wealth tax with a top rate of 6%, in order to fund her Medicare for All plan; Bernie Sanders’ tax plan tops out at 8%. As the Overton window shifts, * Piketty has made sure to stay well ahead of it. In his new plan, America would raise its taxes high enough to collect 50% of national income each year – roughly $10 trillion, or three times as much as the federal government currently takes in. With this cash, the government would not only fund universal health care and higher education but offer everyone a basic income floor equivalent to 60% of average after tax income. On your 25th birthday, you’d also get a cash payout of $230,000 – the equivalent of 60% of the average adult’s net worth. (Piketty has called this … ‘inheritance for all.’) It’s enough to make Sanders blush.”
*The Overton window is the range of policies politically acceptable to the mainstream population at a given time.

In short, I believe the market is down because investors fear Bernie could win in November, then raise taxes to fund socialist programs, including regulating business out of existence. That’s a real scary virus.

All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

Global Mail by Ivan Martchev
With Saudi Help, Oil is Headed into the $20s

Sector Spotlight by Jason Bodner
History Indicates the Market Could Bottom Around March 20

View Full Archive
Read Past Issues Here

About The Author

Gary Alexander

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander

Important Disclosures:

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.

ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:

  • ETF shares may trade above or below their net asset value;
  • An active trading market for an ETF’s shares may not develop or be maintained;
  • The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
  • The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
  • Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.

Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.

Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.

This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at or by requesting a copy by emailing All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.

FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.