While last week was a turbulent one for many investors it seems this week has the ambition to put that one to shame as the Dow ended Monday down 2,997 points, having reached over 3,000 points down just a few minutes prior to close. Things are likely to get worse before they get better as we are starting to see widespread shutdowns sweep across the United States and international decoupling accelerating in ways previously unexpected. While there is only a limit to all the black swans that can keep happening to the markets amid the coronavirus pandemic nonetheless the current sharks swirling shows that we may be pushing new lows still for some time to come.

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Data by YCharts

America Is Entering A Temporary Shutdown

San Francisco orders a total lockdown of the city until at least April 7. Las Vegas, Los Angeles, and New York City all grind to a halt. New York State and the rest of the Tri-State area order closures to restaurants, theaters, and casinos as do many states across the United States that seem to increase by the day, making the school closures of last week seem old news. This does not even include what is happening across the world as places such as Austria limit public gatherings to a maximum of five people amid similar drastic efforts in other nations.

The international situation is increasingly deteriorating as well in ways that could not have been fully expected, and thus priced into the market as a reasonable risk, just a few weeks ago. Canada announced they are suspending all entry except by its citizens and for the moment U.S. citizens. Germany and Spain, and perhaps France, are closing their borders and creating serious shakeups to the Schengen Area of free movement. The situation in Italy appears to be getting worse rather than better as the hopes for a quick defeat of coronavirus in it and the rest of Europe and the world fade.

Markets Price In The Heretofore Unimaginable

These are all risks that the market hadn't truly been expecting even as late as last week and undoubtedly contributed to Monday's historic drop, the worst percentage drop since Black Monday in 1987, wiping out the gain's from Friday's optimistic rally and putting equity markets at new lows once again. On a positive note however was, as contrasted with Black Thursday last week, bonds initially were in the red but climbed up and eventually rallied - a positive sign for belief in the long-term stability of the economy and its companies even amid short-term trouble.

Unfortunately, short-term trouble still looks very probable for the upcoming few weeks. Many of the drastic lockdowns that U.S. state and local governments are implementing are extremely disruptive to everything from consumer life to business sales to even any company being able to organize its employees coherently. Goldman Sachs already estimates this quarter's U.S. GDP to be -5% and full-year growth to be a meager 0.4%, significantly downgraded from even just a few weeks ago let alone before the coronavirus pandemic.

The turbulence in the market often seems indiscriminate and that's because it largely should be as the shrinking of the consumer and business activity may affect some sectors particularly hard but still affects them all. Furthermore when more extreme actions are taken, such as legal curfews and travel restrictions, that no longer places the consumer and business activity in the hands of the market but essentially just reduces it to zero for a time being.

It is easy to imagine a year from now, once hopefully the coronavirus pandemic has been dealt with either through containment or vaccines, the market rallying hard, pushing aside the "lost quarter" it experienced and things returning to normal - or even perhaps better than normal as all the folks quarantined, social distancing and locked-in want to enjoy and be active in the world again and do so with reinvigorated force.

It Still Will Be Volatile But Hopefully You've Been Desensitized

In the meantime, I expect that the market will decline in the short-run because of how these new, particularly economically destructive measures are being rolled out to combat coronavirus and how they seem to be spreading fast. However, in the most ideal scenario, this means that coronavirus could be contained mostly in just eight weeks in the United States according to the CDC in guidance encouraging social distancing. In more realistic scenarios it could take well into the summer, according to the President in a press conference Monday afternoon, or in worse cases far longer.

Yet the world isn't ending and someday the market will be back. There are good buying opportunities out there now in sectors - such as technology (XLK) - that have ample cash flow liquidity, good balance sheets, and are not the sectors experiencing the greatest declines in business whether short-term or long-term. With Microsoft, Apple, and Google each having over a hundred billion dollars of just plain old cash sitting around it is hard to imagine them having liquidity issues and there are many other companies similarly well-capitalized.

Find the good buys out there, don't over-leverage, hold, be ready for lots more pain, don't call a bottom, and sell high. All simple investing wisdom tidbits but sometimes really easier said than done - particularly in times like these.