With the White House announcing that they plan to appoint an Ebola czar, it¹s either a sign we should all start panicking or designed to stop the panic that is already gripped the population and markets — probably the latter. The markets rallied, in part based on the increased efforts by government officials to address this horrible disease.
As investors, fundamentals matter but one cannot lose sight of the fact that markets are an incredibly emotional organism. Look at what happened to Netflix this week. The company posted growth that was not up to analyst expectations (they are still growing) and the stock proceeded to drop 25 percent in after-hours trading. While that type of fluctuation may be wholly ridiculous, it is an indication that the markets are a combination of data and expectation wrapped in a massive emotion-based perspective.
No one can doubt the seriousness of the Ebola outbreak in Africa. It¹s completely understandable that some degree of anxiety is reasonable about the impact of this disease on the United States. Think back to the anxiety around swine flu or SARS. It was right to be concerned about those diseases as well.