Every time my phone starts ringing off the hook to make TV network appearances, I know it's a sign there's a Reality Gap big enough to make some real money.
A Reality Gap is the huge chasm between what the news media (plus Wall Street, Big Government, and Madison Avenue - or as I call them, the "Big Four") is serving you and the actual truth. The illusions they peddle aren't in your best interest; they distract you from what's best for your money.
Take China's coronavirus outbreak. Over the past two weeks, I've made seven television show appearances to talk about the coronavirus and how it's impacting markets and individual stocks.
It's pretty clear the news media is having a field day over this. Every minute, there's a new update on infections, possible mutations, comparisons to SARS... This human tragedy is being milked for all it's worth.
The reason why is simple: Fear sells. No TV news segment, news website, or cable news update is complete without a coronavirus update, because that's currently what gets views. And more views mean more money selling ads.
It's overtaken the top of the news agenda - the president's impeachment trial, Monday's Iowa caucus, even the record-breaking wildfires still raging in Australia.
Not to mention the things you can actually act on, like Amazon's extraordinary earnings surprise...
And the news media isn't the only culprit here, either. Big Government is getting in on the game, too, with health organizations underreacting, then overreacting, and issuing jarring headlines.
"CDC: Preparing as If Coronavirus Is 'the Next Pandemic.'" This led to a 250-point drop in the Dow on Jan. 24.
And lost amid all this noise is a Reality Gap between what's being said and what should really matter: the truth.
And the truth is we're turning the corner on this outbreak. As the very numbers the news media uses to whip up panic show, coronavirus cases are peaking. This means the end is in sight.
I know because I did something the news media won't do for you - I took a closer look at the numbers beyond the headline distractions. Let me show you...[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
News Media and Wall Street Want You to Stay Afraid
Now, let me be clear. We're not going to wake up in a couple of days to the news that there are no more cases.
This outbreak will continue for a while. But its rate of growth is dropping. And that's the sign that makes all the difference.
We've been getting such bad coverage of the data (because fearmongering sells), that the engineer in me cried out for a better way to assess the data.
So, I recently took the time to grab numbers and build a graph so that we can see whether the outbreak is growing or shrinking in rate of transmission (cases) and acuteness (deaths).
Forget the daily squeals of how many new cases are being added. Here's the only chart you need, which shows how quickly the number of cases and deaths have been growing. (Hint - the growth rate is actually shrinking, and consistently so.)
As you can see, both numbers have been growing slower and slower. This is what the news media doesn't want you to see. They want you to hear "2,857 new cases" and think how big that number is.
But the day-to-day growth rate is shrinking, and that's the key for us as traders and investors.
There are many possible reasons for this slowing growth in new cases and deaths: China's quarantine, better treatment, earlier diagnosis, etc. Probably a mix of most of these.
Whatever the reason, soon the numbers will plateau. There will be bumps along the way, but the coronavirus outbreak is showing clear signs of peaking soon.
Now, the news media will want to keep this story going. So once the numbers stop climbing, I'm sure they'll try to keep our fear alive and our eyeballs on the news with some other angle. Probably "human interest" stories profiling what it's like to have been infected, or what life in one of China's quarantined cities was like.
Wall Street is getting in on the hype, too. For example, Delta Air Lines Inc. (NYSE: DAL) just announced that it's cancelling many of its scheduled flights to China through at least April 30.
United Airlines Holdings Inc. (NASDAQ: UAL) and American Airlines Group Inc. (NASDAQ: AAL) announced similar cuts last week.
That's a very long time, especially with about half the aviation industry's growth coming from the Asia-Pacific region. It's also unclear how much this will help contain the virus, since some flights will still go ahead.
I expect all three airlines to resume services sooner than that.
Governments, meanwhile, are also doing their part to ramp up the alarm...
Big Government Is Overreacting
New Zealand and Maldives have both announced a ban on visitors from mainland China, while the United States has banned foreign nationals who have been there in the last two weeks.
What we're talking about here are PR stunts, however well-intentioned, aimed at making you feel safer.
But they end up simply reinforcing the idea that this virus outbreak is so dangerous it requires extraordinary measures, when in fact the outbreak has been blown way out of proportion.
Let me put it this way. The Johns Hopkins Center for Systems Science and Engineering is hosting a live map of coronavirus cases right here. (Click the map at the bottom.)
As I write this, the number of total infections in China's Hubei province, where the outbreak started, is listed as 11,177.
That's almost 64% of the worldwide number of 17,489 cases. The province also accounts for 350 confirmed deaths, over 96% of the global total.
But note that the Hubei province is home to 58.5 million people. That means less than 0.02% of the city's inhabitants have been infected. That's 191 out of every 1,000,000 people. At the very heart of the outbreak.
Even if those numbers are underreported, there's some ways to go until it's a significant portion of the population.
Without question, there's a heartbreaking human tragedy behind every single one of those cases. My heart and prayers go out to everyone affected and everyone who's lost a friend or loved one.
But it's important we keep some perspective here. News media, Big Government, and others want you to panic. Whether there's a reason to or not.
I recommend you don't let them. Because while they're busy trying to frighten you, you might miss out on what you can actually do about this outbreak...
Get Ready to Buy the Dip
As the coronavirus outbreak starts plateauing, the markets will begin to turn.
Buying the market in general is going to be the near-term play here. I especially recommend looking at Chinese stocks, which have been beaten down even more than the market in general.
Alibaba Group Holding Ltd. (NYSE: BABA) in particular has suffered, even though its business model and future revenue is not at any real risk from the coronavirus.
In the medium term, there may be some pain as China's massive quarantine procedures impact its economy. As I'm writing this, some 50 million people have been asked to stay in their homes to prevent the spread of the disease. That means a lot less consumer spending, which has already showed up in oil demand numbers. Already, Chinese oil demand is down a whopping 20%.
I'll be keeping a close eye on these developments. But I'm not worried about them right now.
Buying BABA or some Apple Inc. (NASDAQ: AAPL) - stocks that have been much more affected than the broader U.S. markets - will pay off as the spread of the virus is contained and slows even further.
Or if you want an even safer play, grab some Microsoft Corp. (NASDAQ: MSFT) - a stock that hasn't been impacted much at all by the virus outbreak. In fact, I gave a MSFT option trade recommendation to my BetaFlow subscribers on Friday, and in less than two trading days, they had the opportunity to secure a 124% profit!
That win marks the sixth profit of at least 100% or more that the beta testers of my newest trading strategy have had the chance to take since the start of 2020. Get the latest news and updates as this incredible service goes live by joining the BetaFlow mailing list.
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About the Author
D.R. Barton, Jr., Technical Trading Specialist for Money Map Press, is a world-renowned authority on technical trading with 25 years of experience. He spent the first part of his career as a chemical engineer with DuPont. During this time, he researched and developed the trading secrets that led to his first successful research service. Thanks to the wealth he was able to create for himself and his followers, D.R. retired early to pursue his passion for investing and showing fellow investors how to build toward financial freedom.