The market has been gripped by coronavirus fears over the past two weeks
The lessons to be learnt from the market this time around is no different from any other case of heightened fear and nervousness, ranging from geopolitical tensions to the SARS virus outbreak back in 2003.
But there are reasons why the market is more fearful this time around in reaction to a deadly virus outbreak that is impacting the global economy.
Let's take a look at why that is the case for the new coronavirus outbreak.
Information travels much, much faster these days
In this day and age, social media is king. Information - whether accurate or false - travels so quickly and more widespread that you can pretty much get live updates from just about anything and everything in the world today.
Not only that, you can even get more of a sense of how things are on the ground without even having to be at that particular place to know about what is happening.
But the power of information also has its downside. It is human nature to be excited, curious and even boastful - in the wrong way - about the information we know.
In that regard, the more widespread information becomes, the more we have the tendency to lose the sense of the accuracy, context and the intention of said information.
As information travels much faster and more widespread in the world today, the drums and echoes it produces are also much louder and stronger. That is why emotional attachment to the information is also much higher than before.
As such, emotions such as fear, excitement, anger, outrage may tend to be overblown due to the overwhelming information and echoes produced with regards to any topic.
The world is more interconnected today than yesterday
And the day before, and the day before.. You get the picture.
Countries all over the world and the global economy is much more linked to each other than it was almost two decades ago. That creates a higher risk of a domino effect if one part of the linkage gets broken or disrupted in a meaningful way.
In this case, China represents arguably one of the key cores linking the global economy. As the saying goes, "when China sneezes, the rest of the world catches a cold" - quite literally when it comes to the coronavirus outbreak situation.
With China being a key contributor to the global economy and services sector around the globe, the stronger the pinch that will be felt by the country will reverberate across the region and to other countries around the world as well.
Information echo may not be a bad thing
As the echoes nowadays are much louder and stronger, it also means that society tends to be more well-versed and well aware of the possible repercussions and consequences of negative developments around the world.
In the context of financial markets, this means that any topic will likely be beaten to death at some point and we will start to look beyond that to "what is next?".
And with traders and investors now being more quickly able to identify the key risks and possible fallout from the coronavirus outbreak, we can also learn to price in those expectations and quickly move on to the next key theme in the market.
The SARS virus cast a dark cloud over markets for about five months but unless this really threatens to be an unprecedented pandemic, I reckon we may move on from this fearful environment much more quickly (though, we're only in week two now).
Wall St was screaming for a correction as stocks continue to hit all-time highs after the US-China Phase One trade deal. This was pretty much the perfect storm for that to happen.
But is it all over already? I don't think we have enough clarity to be sure just yet and we are still in the early stages of figuring that out. But once there is light at the end of the horizon, it would not take long for the market to go running and chasing once again surely.