Combined with the biggest gains in history at the around same time..
The situation that produces the problem that this period is unsure of how much this is going to last.
Not to mention the 2 trillion..sorry..TRILLION package so that people can stay afloat during times that they are not making any money..
All this complicated situation makes people think
How long is this situation going to continue?
Haven’t we already missed the bottom?
So, here are some of the reasons it should CONTINUE going down:
1.This whole situation with the “illness” is still VERY new
First, this whole “illness” is still VERY new, and we’re only just over a month into it – so, many argue that we haven’t really felt the effects from what’s possible, and that stay at home orders could last much longer than expected.
For example,the impact of India’s lockdown will be very important,(if you remember their population numbers that is passed 1 Billion ),but yet still unknown.I think it is safe to say that the situation there is pretty bad.
Also, a lot of businesses in “developing” countries do not have already put in place a good infrastructure to withstand something like this.
I believe that this is important to mention because of the fact that the American economy will be directly affected by the “illness”.
Second, we need to address unemployment…which just hit 10 million claims in the last 2 weeks.
Now, sure…SOME of this is going to be temporary, and a big portion of that will resume working once businesses open back up.
HOWEVER…I think the kicker here is that, once things open back up…many businesses will start to see less demand, because people just won’t be spending as much money, because they have savings and bills to catch up on…and, because of that, businesses won’t be as busy, and won’t need to hire as many people as before.
3.People won’t spend
Third, even AFER all of this subsides…people are STILL going to be in a financial mess. They will still have bills to pay. They still have rent. They still have mortgages. And stimulus money will only last for so long until people are on their own again, and expected to pick up the pace to make ends meet.
At this point, it’s unclear how quickly that is going to come and how soon we can return to normal.
4.What’s “Priced In”?
And fourth, we really have no idea how much is already “Priced In.” You guys know the saying…buy the rumor, sell the news? Well, that’s a bit applicable here. The stock market doesn’t care about what’s happening RIGHT NOW…it cares about what MIGHT happen in the future.
However…to counteract some of these, here are reasons why the stock market could recover:
A cure will come!
The FED will step in.
The market dropped 37%
Bad news priced in?
Lots of pessimism.
First, at some point, people will return back to work, and in a few years – this would be a thing of the past. If you’re investing your money without the expectation of using it immediately, it doesn’t matter if you invest now – or if you invest a year from now – as long as you just invest.
Second, the Federal Reserve has made it clear that they’ll do whatever it takes to keep the economy going, at all costs… It does make you think that, if things get too bad, the FED will step in, get more money into circulation…and stop some of the losses.
Third, the markets have dropped – from peak to low – nearly 40% at its worst, which wasn’t an insignificant drop, by any means. This drop was during a time where – outside of THIS event – everything was otherwise going relatively well. Interest rates were low, people were spending, consumer confidence was high, unemployment was low – and when we take this out of the equation, not too much had fundamentally changed.
Fourth, there was already a LOT of bad news priced into the market – so, what else are we not taking into consideration?
Fifth, anecdotally…and I say this PURELY from opinion…but, it seems as though there’s a LOT of pessimism out there that the markets WILL go down, and it WILL get way worse…and that almost makes me think that, if the majority of people BELIEVE that…then, it’s less likely to happen.
Lesson: Focus on what you CAN control, and disregard everything you can’t…you give yourself MUCH greater power to make the most of opportunities, LONG TERM, without concerning yourself about what the markets may or may not do in the short term.
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