The stock market correction explained
- Stocks had become overvalued due to (a) Federal Reserve policies, and (b) lack of returns from other types of investments.
- The U.S. stock market was overdue for correction. A 10% correction is usually an annual event, but U.S. stocks haven’t had such a correction since 2011.
- U.S. economic growth has been slow, and corporate revenues and earnings have largely stopped growing.
- Most stock trading today is computerized on platforms like etoro, and pre-programmed “sell” signals all tend to go off at the same time, resulting in “cascade” selling that produces very abrupt and large market movements. The impact on cryptocurrency trading can vary slightly though. With this in mind, it might be worth learning more about something similar to the British Bitcoin Profit robot used by brokers in the industry.
- Those algorithms were triggered by deteriorating economic signs in China and other emerging-market economies. Some of those governments are devaluing their currencies, which may set off “currency wars” likely to further hurt the already-weak global economy.
- The Federal Reserve is expected to begin raising interest rates next month, which is a mildly negative factor for stocks, but this is not the major cause of the current stock market decline. It may add to it a bit, but the major cause is China’s slowdown and troubled Third World economies.
- If you own stocks, the right thing to do is (a) stay calm, (b) hang onto what you have, and (c) take advantage of lower stock prices by buying more stock, if you have any cash you can invest.
Tags: Business, Economy, Stocks
Posted 24 Aug 2015 by Roger Rabbit
in America