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BINGHAMTON, N.Y. -- Today the Dow decreased more than 1,000 points with the rise of coronavirus cases outside China, but Dan McKeever, assistant professor in the School of Management at Binghamton University, says investors shouldn’t be concerned. McKeever says people shouldn’t be worried about the recent drop since it is closely tied to people’s emotional reactions, and every scare, whether it be financial or not, has an effect on the economy. He notes that people should focus more on the long term results and ignore the short term changes.
“The stock market is supposed to reflect the value of companies, but it also reflects a lot of human emotion. And so in the short run, when there's big scares like the coronavirus, you'll have people reacting emotionally. There's uncertainty about how this is going to affect things like the global supply chain. China's a huge producer. They're also a major consumer. And so if people are sick, they're not going to work and they're not buying things. How bad is this virus going to get? We don't really know. So because we don't know how bad the virus is going to get, investors I think are understandably spooked about the potential long run consequences for the global economy and you're seeing that with this really sharp drop, short, sharp drop in the s&p 500.”
McKeever, an assistant professor in Binghamton University’s School of Management, is an expert on empirical and behavioral corporate finance, board networks, and corporate governance. He received his B.A. in economics and journalism in 2010 from The Ohio State University, and his Ph.D. in finance from Penn State University’s Smeal College of Business in 2018.