Obviously if it keeps going down, that’s bad. But it looks like it’s at a support level and still much, much higher than it was 5 years ago. (Using SP500 as a proxy for the market at large)
In: Economics
People don’t like seeing their retirements down this much in 24 hours .
Also when the news headlines for 10 years now been talking about a recession “ coming soon “ everyone thinks this time is going to be a recession
Losing the gains it took months to build up in less than a day doesn’t guarantee those gains return in the same time frame or at all.
People panic, especially if it has to do with money.
Unless you’re investing with money needed in the short term, you’ll be fine.
It isn’t. There are many factors at play but the sensationalism is ridiculous. If you are a crypto bro or a day-trader, yeah go find a bar. For most people, turn off the news, make your contributions and go about your day.
You are correct to not be panicking. Remember that the financial news sites NEED to have a headline story 24/7, so when SP500 is up, they’ll scream BOOM and when it’s down they’ll scream CRASH.
To the extent that people are worried, it’s because the stock market is now joining a whole bunch of other financial indicators that suggest that the USA is heading into a recession. However, those same indicators also indicate that it would be a super-mild recession, with unemployment only around 5%. There are a few high-risk businesses that look to be in trouble, like crypto, but the old-fashioned “stuff you can drop on your foot” manufacturing sector looks fine. So some stocks will drop, but there’s no reason to expect a big market crash.
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Capitalism essentially implies economic growth will happen forever. Big number get smaller = bad.
It can have knock-on effects, but it is important to be able to cut through the noise and distinguish “this is very bad for rich people with readily-available media outlets” from “this is bad for the economy.”
The main risk here is a general paring down of lending as big wealthy investment groups lose a lot of money on loans they took out. That isn’t certain to happen, and a frustrating quality of finance is that financiers have little knowledge of, or interest in, their own role in systemic trends. So this could pose a serious risk to lending to everyone, which matters a lot. Or it could just mean some hedge funds go bankrupt, which hardly matters at all. But the market movements conjure this “coin flip,” if you will, into being. Thus the anxiety.
People are about to find out the hard way what happens when you pull your 401k when the markets dip. IIRC if you stayed your 401k would have recovered much more quickly.
Because the global economy is hyper-focused on growth.
Once upon a time, you could invest in a company that would pay a reasonable dividend to shareholders and people would be happy with that.
Today the investor class is only happy when share prices increase. Many would rather invest in a company that’s never actually turned a profit but has positive buzz and share prices on the increase than a company that’s boring but profitable. (This has probably been true since the dotcom boom.)
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