Enduring a stock market crash is something most investors will eventually have to do. It can be intimidating for new investors and seasoned experts alike. We are currently testing the taste of that with the current turmoil in the market.
And we get it – it’s normal to worry about what comes next and what it might mean for your investments. But this is part of the investing game, and it won’t last forever. we are with you.
Let’s now look at what’s really happening in the market, and what you can do to prepare.
Is the stock market going to crash?
It’s hard to predict what the stock market will do. But we can take a look at what is happening in the present and understand the factors that contribute to market volatility to better understand what the future may hold.
Since the start of 2022, the FTSE 100 has essentially not moved. But the same cannot be said for investors across the pond. The S&P 500 and Nasdaq are down in double digits, with the latter down nearly 30%!
Technically speaking, the current situation is a correction, not a meltdown. But this does not mean that it may not turn into an accident in the future.
With that in mind, let’s explore the topic in more detail.
Why the market crash?
If we look through history, stock market crashes were caused by various unique reasons. In the late 1990s, investors realized that Internet companies were not up to the hype. In 2008, the housing crisis began in the United States before spreading around the world. And in 2020, a pandemic emerged and shut down almost every economy on the planet.
What about today? It looks like we’re having a whole bunch of problems right now. To name a few, there are very high inflation, high interest rates, labor shortages, supply chain disruptions, the ongoing Covid-19 lockdown in Asia, and an energy crisis in Europe. All these factors lead to a decline in economic growth. Now, fears are spreading that another recession is on its way.
Let’s take a step back for a moment.
It is important to remember that a recession is the worst case scenario. Nobody really knows if it will happen, let alone how dangerous it is. Uncertainty is what drives stock prices down.
